Bob Kutschbach, owner and broker of Carleton Realty, discusses how to make your offer competitive when you find your dream home.
In a housing market like we have currently in Central Ohio homes are commonly getting multiple offers within a day or two of being listed. It is not unusual to receive 7 – 12 offers when a home hits the market. What can a buyer do to get their offer accepted? First, do not lowball! A lot of people think that it is a normal part of negotiating to go in with a low offer but you can easily offend the seller. When you lowball the seller may think that you are saying that the seller’s home is not worth what they think it is. The seller may not even consider a counter offer or even responding to your offer. You must go in with a competitive price to be considered in our market. Your agent should be helping your determine what the other homes that have sold recently sold for compared to their list price. But this still may not be very important since we are consistently seeing homes sell for $5,000 – $10,000 over their list price.
Another thing that sellers are looking for is your pre-approval. You MUST be pre-approved to be credible when making an offer. The type of loan that you are are eligible for may also affect the offer. Sellers are giving preference to cash and conventional loan offers. In a conventional loan there are much less stringent criteria on the condition of the house as well as easier appraisal standards on the value of the home. If you can qualify for a conventional loan it can give you an advantage. Cash is good but keep in mind that if a cash offer is $5,000 less than a conventional offer then the seller is most likely to go for the extra cash. The cash offer used to hold more weight but but today, with pre-approved buyers, conventional offers are just as competitive as cash. Cash offers have to come in just as attractive to sellers as conventional offers.
There are other things that could make a difference with your offer. Possession, sometimes the seller needs a few weeks to move out of the home. Asking for immediate possession may be a turn-off. This is where a good real estate agent can talk to the seeler’s agent and find out what the seller needs in an offer.
Another thing is an earnest money deposit. Earnest money is not a requirement in the state of Ohio. Though many sellers will not take an offer seriously if it doesn’t have an earnest money deposit with it. In our Central Ohio market $500 – $1000 is a common amount for earnest money. In other markets 1% of the list price is whats common. Just offering earnest money may make your offer more attractive to sellers.
One the most unusual things that we are seeing is the appraisal gap. With offers coming in over list price there is a good chance that the home will not appraise for the contract price. Our standard contract allows for it to be voided if the house does not appraise. Buyers are offering in the contract that they will bring an extra amount of money to closing if the appraisal comes in low. This is risky for the buyer, they have to prove that they have the extra money to the seller. This money would be in addition to the down payment and closing costs.
Some buyers are even waiving home inspections. This is another risky type of approach. If the home appears to be in excellent condition, a buyer may waive the home inspection or remedy requests. The buyer may proceed with the home inspection but not ask for repairs, either buying the home as-is or voiding the contract.
These are just a few of the successful techniques that used to help you get your dream home! If you have questions please reach out to one of our agents. We are happy to help!