I don’t know about you all, but 2020 has been one of the most challenging, wild and important times for me personally. 😅 Maneuvering through the global COVID pandemic and the stress that came with the heavily truncated 2020 election was more than enough. And that’s not even to mention the cases of police brutality and pulling back the curtain on systematic oppression. This really has been one to learn from and never ever forget. But in many ways the difficulties of this year have made many of us take a step back and really work on ourselves. I sure have been looking at myself in a different lens, and have used this space to really work on my craft as a Realtor.
Back in February when COVID was still in its infancy, no one really knew what was in store for us. When the Stay Home Stay Healthy order was first announced it sent a shockwave to all of us. We realized our lives were going to be lived very differently for the foreseeable future. For me and other Realtors, that meant we were left in the dark on if we would even be able to work or not. And also what impact the pandemic would have on the housing market as a whole. What has happened since then has been very interesting to watch and actively participate in, as well introduced some new challenges that we couldn’t have possibly seen back then.
The market did come to a halt initially when we were deemed to be a non-essential business by the powers that be. But, once real estate was made an essential business the market picked back up, and it happened quickly. What we’re seeing in the market today, in December, really boils down to basic supply and demand. In response to COVID the Federal Reserve responded by lowering interest rates across the board, many Buyers are receiving 3% or lower rates on the their mortgage loans right now, which means they can afford more expensive homes! Also as more of us transitioned to working from home, in some cases permanently, many have decided that their current living situation just isn’t cutting it anymore. They’ve decided to purchase a home, either for the first time, or move into a different home that better fits their needs.
Because of these two factors demand for housing is extremely high, however the inventory, or supply to support this demand just isn’t there. In fact inventory levels are currently at historic lows. This makes for the ultra competitive market we’re seeing right now for Buyers that shows no signs of changing anytime soon. I’m really not trying to sound bleak here, it’s just very important that you understand the market you’re stepping foot into so you have the best chance of getting your dream home. You already know your boy J Cain’s got you covered with tips and tricks to win in this market.
Here are five strategies my clients have had great success with, and will give you the best chance of success as well!! 👍🏾🏡
Work With a Local Lender
Working with a reputable local lender can at times, be the deciding factor in a Seller choosing your offer over the competition. Your lender is an integral piece of purchasing a home as they are the ones that dictate how much home you can comfortable afford, as well as making sure all your finances are where they need to be so you have the funds to close on the house. In a market that moves as quickly as this one, having a lender that works weekends, has a more involved role in their company’s process and can close on schedule is very very important to Buyers and Sellers alike.
Be Ready to Move Quickly
Jumping off from the last point, being ready to move quickly and effectively on your potential home goes a long way. Once the lending side of the process is squared away you will be ready to find the one, and when you do you need to pounce! That means you should strategize with your Realtor immediately and get your best offer in the Seller’s hands right away. Some Sellers will elect to review offers as they come in, while others will choose a set review date for offers. Either way, your goal is to get that Seller to choose your offer before any others come in to compete with yours.
Pre-Inspect the Home
If the home you want already has offers, or the Sellers have had a lot of interest, are expecting offers and want to wait, another great option for you is to ask for a pre-inspection. A pre-inspection is done prior to submitting your offer. It is less formal than a traditional inspection, in that, it will be a verbal inspection that will take a max of two hours to complete. Doing this will allow you to make sure the home doesn’t have any major issues that would keep you from purchasing it; such as a broken sewer line or structural issues. If you still want the home after your pre-inspection, you can then waive your inspection contingency. Which is important to Sellers because they know you’re already happy with the condition of the property and you won’t be asking them to make any repairs!
Go Big With Your Earnest Money
Earnest money is a check that is submitted to the Escrow company once the Seller accepts your offer. It is up-front, good faith money that goes towards your down payment, but will be used as collateral if you were to default on the transaction for a reason that doesn’t fall under one the built-in contingencies to the contract. The standard amount of earnest money is 1% of the purchase price, however bumping that up or even doubling it will make your offer stand out. This proves to the Seller that you have the cash on hand to close. Put it this way, if there are two offers that are identical but your offer has higher earnest money, guess which offer the Seller is going to choose? (Yours) 😎
Utilize Additional Down Funds
In my experience, offering additional down funds with your offer is the most effective factor in writing a winning offer. Most homes in this market are being bid a minimum of $15,000 over the list price. Essentially Buyers are willing to pay more for a home than appraisers are willing to value the home at. Additional down funds bridge the gap between the price you’re under contract at, and the appraised value of the home. Say you’re under contract on a home for $500,000 and your offer included $5,000 in additional funds. But the appraised value of the home comes in at $480,000. In this scenario the final price of the home would be $485,000 because of your additional down funds. It’s important to remember that these additional funds will be cash out of your pocket that you will apply to your down payment. Also, if the home is appraised at your agreed value the additional down funds will never actually come into play!
I hope these tips were helpful and informative for you. Choosing any of these, or all of them will definitely give you the best chance of winning your dream home in 2021! If you have any other questions or if you’d just like to chat about the market, feel free to give me a call or shoot me a text (253) 882-7974. Happy hunting!! 🏡👍🏾