Tag: sellers market

How to Choose the Best Offer and Close the First Time

Congratulations on taking the leap and placing an offer on your dream home! After some time looking, you’ve finally found the perfect house for you and your family and are willing to pay the list price. So, it’s a done deal, right? Sometimes, it’s not that simple.

Today’s market is known as a seller’s market, which means there are more buyers than homes for sale, which can mean that a full-price offer isn’t enough. But, keep reading because we’re going to discuss how to make your offer stand out in a competitive market. If you follow these tips, it just may push your name up on the seller’s list of potential buyers!

Seek Full Pre Approval

Most home sales fall through due to financing issues. To ensure your offer stands out among the crowd, be sure to point out the fact that you are fully pre-approved. To make this clear to the seller, you should include a copy of the lender’s offer and not just send the basic pre-approval that’s dependent on other conditions.

Hire A Great Agent

Good realtors have a solid understanding of how the market works; they are proactive and communicate clearly. Don’t settle for the first agent that’s recommended. Instead, meet with several and choose the person who seems most informed and someone whom you are comfortable around.

Start With Your Highest Offer

The majority of sellers choose the highest offering price over all other factors. Remember to shop only homes that are in your price range, and don’t let your emotions take over. Regardless of how much you love a property, you need to be prepared to walk away from it so that you don’t end up with a monthly payment you cannot afford.

But at the same time, don’t undersell yourself. If there’s a house you really want and can afford to pay a little extra, this can be a deciding factor to close in a competitive market.

Offer a Larger Down Payment

No matter what type of home loan you plan to obtain, offering more money down is a sign of good faith for the seller. Anytime you can prove that you are in good financial standings is a benefit, and being in a competitive market is not an exception to the rule. Offering a higher down payment shows the seller that you’re serious about the property and can meet all financial obligations.

Ensure Your Offer is Complete

Obviously, you want to pay attention to every detail when it comes to completing an offer, but mistakes do happen. These types of issues can include missing EMD, disclosures, and other important information regarding the purchase agreement. Anytime you’re in a competitive market, any such mistake can make your offer get pushed to the side.

And, even worse, if the seller receives numerous incomplete submissions, yours may never get a second thought. So, if you want to solidify your chance, be sure to dot every I and cross every T. Check and recheck!

The bottom line is that buying a home can be daunting, and there are many factors when it comes to writing contracts. If you pay close attention to each of the tips above, then you are on your way to scoring your dream home, even in a competitive market!

How to Challenge a Low Home Appraisal in Orange County

In a seller’s market, scenarios with multiple offer commonly increase the purchase price more than any comparable homes sold in the neighborhood.  This explains why in those situations many sellers are concerned their sales price may be affected by a low appraisal. In a buyer’s market, when prices are dropping, sellers have anxiety that the appraisal will come in low.

As of Sept. 6, market time to sell a home in Orange County analyzed by the Southern California News Group reached 98 days vs. 64 in 2017 and an average 76 days from 2012-2017. With this metric exceeding 90 days, by ReportsOnHousing’s logic, the conditions for a “seller’s market,” no longer exist. It has become a more balanced market in relation to supply and demand.

A low appraisal can be the result of one of the following:

Declining home values due to a buyer’s market; a larger inventory of homes with few buyers.

Neighborhood declines due to a large amount of foreclosed homes or short sales

Seller or agent priced the home too high

A newbie appraiser who failed to recognize local influences on value.

Appraiser did not consider pending home sales, which may have warranted higher value

Appraiser used comparable sales from the wrong neighborhoods. Example; Laguna Beach and Mission Viejo or San Juan Capistrano and Dana Point.

Sometimes when an appraisal is performed, mistakes take place, which provides you the opportunity to correct them. Here are seven methods to dispute a low home appraisal:

  1. Request a Copy of the Appraisal Report
    Seller don’t automatically get to see or review the appraisal inspection report unless you request it. Federal law allows the mortgage lender to provide a copy of the report to only the buyer (or person paying for it), based on information from the Bureau of Consumer Financial Protection. In order to get a copy, you should contact the buyer’s agent or buyer if there is no agent.
  1. Examine the Details of the Report
    Errors happen and can be very simple yet obvious mistakes. As an example, the appraiser might have checked the box for two bathrooms versus three, the actual number, or not give you value for double pane windows when all the other comps were given value. Check the data and if you find a wrong data point it out and fight it.
  1. Provide Updated Comps
    The appraiser will rely on recent local comparable properties sales data to value your property. It’s totally possible that a home can increase in value after it was appraised. Get your real estate agent involved and do some digging to find out if this holds true for your home.
  1. Make Sure You Have Permits
    If you made improvements such as a bonus room for additional living space but failed to get a building permit, most appraisers will not give you value for this. Keep detailed records of permits you have from the county or city for inconsistencies.

Related: How to Get a Home For Less Than it’s Really Worth

  1. Get Your Real Estate Agent to Meet With the Appraiser
    Make sure your agent is fully prepared with the comparable sales and listings and is aware of any improvements to your property that warrant your home’s valuation. If the realtor and appraiser are using different properties for valuation, sometimes the final appraised value will be detrimentally different as well.
  1. Contest an Appraiser Who Doesn’t Know the Area
    Every neighborhood and community has their own set of characteristics, which is why it’s very important your appraiser is familiar with your specific area. If an appraiser lives 60 to 100 miles out of the area, he or she may not be the best person to determine your home’s value. Inquire with the buyer’s agent about this fact.
  1. Renegotiate the Contract Price
    If the seller really needs to close on this home to buy another, sometimes they will become more flexible on the buyer not paying the whole difference in value.

An example, is say the appraisal value difference is $15,000, a seller may agree to accept $7,400 in cash and lower the price by $7,500.  Or if there’s a listing agent, they reduce their commission a little to facilitate the deal closing.

  1. Buyer May Cancel the Transaction
    A lot of purchase contracts include a loan contingency and appraisal contingency clause. If the appraisal comes in low or if the buyer fails to qualify for a mortgage to buy the property at the agreed-upon terms in the contract, the buyer can cancel the contract and get their earnest money deposit back. So, you may want to have a flexible seller before the buyer starts thinking of cancelling.

Is it normal to have made 25 offers in 3 months and not one be accepted?

It’s a pretty common theme in California’s housing market where you are all ready to pack-up and move into your new home. The only glitch is you could be up to 50 offers in six months and nothing worthwhile has been accepted. So what more can a buyer do in this situation?

You are up against a few major home purchase obstacles:

  1. The price range you are shopping in is very active with all-cash buyers and fetches multiple offers
  2. As a buyer using a low down payment program such as the 3.5% FHA or 5% down conventional loan, you are competing with buyers who have stronger financial qualifications.

Home sold quickly
Sometimes, it is the agent and other times it isn’t.

Here are some effective strategies that should be used:

  1. Find out if you’re able to be approved with a 10% – 20% down payment conventional program. The reason is because many sellers feel that FHA loans come with more conditions to overcome than a conventional buyer.
  2.  If you’re a patient person you should consider a short sale where there may be less competition for a nice home.
  3.  Low inventory in the area you want? Ask your agent to get in contact with homeowners in your preferred neighborhood whose homes are not listed for sale but may be interested in selling to you now or in the near future.
  4. If you have been directing your attention exclusively to one neighborhood,  see if you can expand your housing requirements and search in adjacent areas.
  5. Give some thought to buying your home with a co-borrower such as a family member or a trusted friend who can add to the down payment/financial requirements which will strengthen your offer.
  6. For people who put a higher than average amount into the earnest money deposit, and well before the actual down payment, you are telling the seller that your intentions are serious to consummate your real estate offer. Other competing offers cannot contend with such diligence.  Not surprisingly, if you withdrew your offer in the middle or towards the end of the contract date, you’d forfeit this deposit.
  7. When buying a home in the frenzied environment of multiple offers, try to come up with a connection between you and the seller. The seller having owned or lived in the house a long time may have an emotional experience with it, and you might be able to get on the seller’s side by communicating your appreciation for certain aspect of the home.
  8. Demonstrate concern for the seller’s circumstance by being flexible on the possession element after closing. Draft an agreement to offer them a 30-60 day window post-closing to allow them to move by paying rent or no rental payment at all. Maintain an advantageous connection by not asking for personal items in the house.
  9. Sweeten the deal for the seller’s by paying for some of the seller’s costs like settlement, transfer, and title policy fees.
  10. It does help for your agent to have a friendly relationship with the listing agent and understand what the seller’s truly wants to close the deal. Once uncovered, you can then make an effort to meet those goals.

If you are in a neighborhood where almost all properties are receiving offers over asking price and you really want a house, you may want to make your offer $5000 above asking price, remove the appraisal contingency, and close in 30-45 days.  This type of offer, if an FHA or low-down conventional, competes better in a multiple-offer environment with buyers who have a large down payment such as 20-30% or an all cash offer.  It suddenly becomes appealing.

If you carefully consider and implement these strategies, you will certainly be a leg up on the competition.