This summer, the Long Beach area real estate market is sizzling and buyers have to beware or they may get burned.. or burned out by unsuccessful bids. “The Bidding Wars Are Back!” proclaimed a recent newspaper headline and that’s definitely what we’re seeing in the trenches.
So as a buyer, how do you win the war?
Our last two listings generated 22 and 14 offers respectively, with the homes’ prices climbing to $20K to $30K above list price. I’m hearing from agents and potential buyers saying they’re frustrated because they are losing out in this frenzied environment. “My clients have made 12 offers above list price and haven’t gotten a single one accepted,” one agent told me the other day.
This is a market of contradictions. It’s definitely not a “buyer’s market” because we don’t have enough inventory to meet the demand. Yet, the relatively low prices and record low interest rates mean it is a good time to buy – if you can get your offer accepted.
How do you do that?
- Understand the Market & Offer Accordingly – This is not a time to come in and make a lowball offer on a property that just came on the market. Depending on pricing, a full-price offer may not even be competitive. On our last listing, the LOWEST offer we received was at full price. Make sure you look carefully at comparable sales so you have an idea of what a home will realistically sell for – and appraise for. That being said, if a home is overpriced and has been sitting for a while, there are still opportunities for negotiation. How will you know? You need to …
- Work With a Local, Full-Time Experienced Agent – I spoke with an agent yesterday who told me he’d have to call me back “after he got off work.” Do you think his clients know he only does this part-time? In a market where homes are moving quickly, you need – and deserve – a local agent who sells real estate full-time. You want someone who will package and present your offer professionally. Also, there is a benefit to working with an agent who is established in the area you want to live in. They may know of homes that are about to hit the market – and they may have relationships with listing agents on homes you’re interested in. Listing agents like working with another agent they know is professional and responsive.
- Have Your Ducks In A Row – You need to already know where your down payment is coming from and have it in the bank, along with “proof of funds” you can provide to the buyer. You need to already be pre-approved. Which brings me to…
- Work With a Local, Reputable Lender – A loan officer who is established in your area may have worked with the listing agent in the past and that could help weigh in your favor. Out-of-area or out-of-state lenders may not understand area customs and timeframes and certainly won’t have relationships with any of the other participants in the transaction. Getting pre-approved with a direct lender is a big plus.
- Understand That The Type of Financing Matters – Cash is king, but cash buyers may not want to pay top dollar so you do have a chance even if you need to get a loan. Conventional financing is usually a plus with sellers, with VA and FHA being less desirable from a seller’s standpoint. Why? That’s because these government-guaranteed loan programs may require that the seller take care of any property deficiencies, ie if there is a patch of peeling paint on the exterior. Additionally, sometimes sellers feel that buyers putting more money down have more “skin in the game” and there may not be as big an issue with the appraisal.
- Figure Out What Else Is Important to the Seller – Have your agent ask if there’s anything else that would help make your offer more attractive to the sellers. Do they want a long escrow? A short escrow? An opportunity to rent-back the property after escrow closes? If so, include that in your offer.
- Add a Personal Touch & Write A Letter – Look around the house while you are there for clues to the owner. No, you’re not going to open drawers or go through cabinets. But if there’s a diploma on the wall for your alma mater or a pennant from your favorite team or a picture of their wedding inMaui and you got married there, that’s a common bond. Write a letter to the sellers. Tell them a little bit about yourselves, why you love the house, and why you’d like to make it your own. If there is a common bond, mention it. Make the letter from the heart, not simply generic. People can tell the difference.
- Understand that Time is of the Essence – This is a market that’s moving quickly. If you see something you like, you may need to make a decision very quickly.
If you have any questions about the current market, please give us a call at 562-896-2456 or email Info@ShowMeHome.com.
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