Monthly Archives: September 2016

How to Win or Lose Multiple Offers when Buying a Home

I hear this all the time from home buyers, especially first-time homebuyers. I am tired of losing a home in multiple offers. With buyer demand, low interest rates and inventory shortages, multiple offers have been a standard in the home buying game, especially in competitive marketplaces and in the first-time buyer more affordable homes category of the market.

Home buyers never win in a multiple offer or bidding war. You don’t know what the other buyers are doing, what their financing is, how many of them are there. It can get very discouraging for home buyers. But, if you want a home and are in it to win it, you can’t be discouraged. You just need a strategy.

Timing is everything. Home buying in a competitive environment is no exception. The cream of the crop homes don’t last long. Beating other offers to the punch could make the difference between a sole negotiation with you and the seller and a multiple offer, so you need to know what is out there and go see it right away. Get into the home right away, even if it is inconvenient, do it. Keep abreast of the market by having your Realtor send you updates on the multiple listing service MLS 2x per day, morning and afternoon, that way you have the most accurate and updated listings available.

And you need to be ready to make a quick decision. Be prepared with your preapproval letter ready. Have all the decision makers attend the first showing. Waiting for your parents to come even the next day and you could be behind the eight ball. While it is important to make a wise unhasty and considered decision, you need to know your marketplace, do your homework and consult your Realtor expert so you know when the right thing comes along.

Don’t submit a low ball offer. That is the first way to lose a home to multiple offers. If you are offering on a fast-moving in-demand home, don’t try to negotiate too much and go really low. Home sellers can consider other offers up until you have a signed (not verbal) contract. If you low ball to try to get the price down, you will lose the home – guaranteed. If another offer comes in, you will definitely pay more to get the price. In a multiple offer, the list price usually becomes the rule, so you sometimes need to get right on it, close to it or over it to win the house.

Again, timing is the biggest factor. Homebuyers always need to consider the market, but not over consider. Remember, if you are getting a loan, and most people are, the home’s value will need to appraise. As a homebuyer, you can never overpay for a home. If you think the price is too high, much better to have no competition in negotiating after an appraisal than keep missing out. Yes, homebuyers do need to pay for the appraisal, so there is some chance of loss, but most times sellers will negotiate once they have a buyer. If you are not sure, have your attorney extend the inspection period and do the appraisal right away, then you can reduce potential risks and losses.

Other terms of the purchase can also be a way to win in a multiple offer. Cash maybe king, but the price is the main consideration to most home sellers. The only way to beat a cash offer is to outbid them. But if you are a cash offer or put more money down, that can be appealing to a seller. Conventional financing is usually more appealing than FHA financing.

Home seller concessions like closing costs, surveys, termite inspections, home warranties and percentage of tax proration can be another way you can beat out the competition. Down payment assistance or relative gifts can be one option other than seller paid closing costs. You can get your own termite inspection, survey and home warranty or do without them. Most financing options no longer require termite inspections and survey. Established homes with obvious boundaries do not necessarily need a survey. And unless your inspection reveals an potential issue with termites, you may not need. VA loans still however need a termite inspection, but it can be provided by the buyer.

Tax prorations are usually a small consideration, but combined with others above, it can win. Depending on the current exemptions, assessment and tax increases and since your lender escrows your taxes at closing and each month, you may not ever have a dime out of your pocket for a tax proration at 100% vs. 5 or 10% over the last tax bill.

Offering to buy the home “as is”. You should always still have an inspection and you still have the inspection contingency in place in a contract, so if you say you will purchase as is and there are deal breakers at the inspection, you can always renegotiate. With other buyers moving onto other deals by then, you may be on your own. You shouldn’t go into the deal with this plan to about face on this term, but you still have options.

There are always pitfalls with the appraisal or as is back up plan though. Backup offers could be in place, so the home seller may just go back to that, but other buyers may not wait around and move onto other homes.

Other terms like favorable closing dates or post-closing possession may suit the home sellers needs and favor your offer.

And if you are tired of the multiple offer game and don’t want to play anymore, there are other options. Very few times does a diamond in the rough have multiple offers. Could be the home a little old lady lives in that is in good condition, but is not updated, could be a foreclosure home. You can get a rehab loan to fix up the home the way you want. You still get your dream home and often a better price and less frustration.

Advice for empty nest or senior move down homebuyers

When you find yourself with an empty nest and you have too much house for your needs, a smaller home and maybe a different area or lifestyle may be the best option. Here are some tips for empty nest homebuyers or senior homebuyers when you are considering a home change.

Assess what you want in a home and what you need for the way you live now. As an empty-nester, the way you lived in your family home when you had kids is not the way you live now. You want to look for an area, home style or needs that suits your new empty-nest lifestyle.

Do you want to do yardwork anymore? Are you ok being in an attached home? Maintenance-free homes are popular among empty nest homebuyers because they no longer want to spend time or have the capability to mow lawns and tend yards. Townhomes or condos are the best bet for a maintenance-free home, but cost of assessments and being attached is something that goes a long with the maintenance-free home benefit.

Do you want activities and a lifestyle? For those over 55, active adult communities can offer a maintenance-free home, even in a single-family home, and also offer activities and other benefits for empty nest homebuyers or senior homebuyers.

Where do you want to live now? Area also can play a part in a new lifestyle. Empty nest homebuyers and senior homebuyers may want to live near friends, relatives or their children. Schools are no longer the main factor in the home buying decision, but affordability and taxes could be the most important aspects for empty nest homebuyers and senior homebuyers who can be on retirement or moving toward a fixed income. Crime, transportation and proximity to shopping, restuarants, doctors or services also can be relevant looking at current and future needs.

What kind of home do you need – how big and how small? Size and style of a home are a consideration. Empty nest homebuyers and senior homebuyers no longer need 4 bedrooms, a huge home and a big basement. They may or may not want a basement. They can usually do 2 or 3 bedrooms, and scale down on square footage. Just eliminating one or two bedrooms and redundant family areas like family room and living room spaces can naturally reduce the square footage. Remember, whatever space you have, you will need to clean and pay for the taxes, maintenance and upkeep. Most empty nest homebuyers and senior homebuyers are moving to reduce that work and cost anyway, so it is a good time to look at what your space needs are.

One big mistake empty nest homebuyers and senior homebuyers do is try to fit their old lifestyle into a new home. Furniture is the biggest issue. You may not need a big dining room set for your new home. But if you plan to host family gatherings, you may still need the space. If you don’t have kids anymore, why have so many sets of bedroom furniture? Take the best and sell or donate the rest. Don’t make the new house fit your furniture, make it fit your new lifestyle and needs. And make your kids come and get all the stuff they left behind in your home. They have homes of their own and if they wanted the old trophies, posters, games and other memorabilia that bad, it would already be at their homes. You don’t need to keep or get a big home to store their belongings.

Do you want stairs or one level? Stairs may be something you don’t want to deal with. Even if your mobility is perfect now, you need to think down the line to avoid being forced to move again.

Is outdoor space important? A big yard is probably not essential anymore. Empty nest homebuyers and senior homebuyers mostly don’t want to deal with a lot of outdoor space, but may still want some outdoor options. So even single-family homes can have less outdoor play areas.

Resale is less of a consideration on these homes as empty nest homebuyers and senior homebuyers are not looking to climb the property ladder anymore. Lifestyle and affordability are more of a factor as empty nest homebuyers and senior homebuyers usually have more equity in these homes and are not likely to go underwater. However, resale always needs to be in the thought process somewhere, just may not be in the top priorities.

One big caution for empty nest homebuyers and senior homebuyers is to make these decisions with their needs in mind, not necessarily the opinions of their family. While family and adult children may offer opinions on any of these decisions, as empty nest homebuyers and senior homebuyers, it is important to listen, consider and then make the decisions that suit you the best. Sometimes adult children let sentimentality toward a family home interfere with what is the best for their parents. And their tastes, desires and thoughts are not always yours. Remember, it is your home, you need to live there, not them.