TIPS ON SUBMITTING A WINNING OFFER IN THE CURRENT MARKET
Real estate reports, NAR economists, and your local real estate experts, are sounding like broken records this Spring, exclaiming “It’s a Sellers Market! According to the National Association of Realtors (NAR), inventory of available homes for sale is at an all-time low – the lowest point recorded since NAR began tracking this metric in 1982 and combined with the prediction that mortgage rates are likely to increase, the market is definitely in favor of sellers. Homes are being sold at or well above asking price and contracts are often being signed in a matter of hours. In the past few years we have had buyers making offers on our listings "sight unseen" due to the detailed way we present our listings. Just this week, Larry had a buyer make a sight unseen offer on a home nearly 15% above list price with a 4% non refundable due diligence fee before the house was actively on the market just to tie it up before it hit the open market. What does this mean for people who really need to buy? Once they find a house, how can they get their offer accepted in such a competitive market?
Whether you are moving to the Raleigh-Durham-Research Triangle for work or you wish to downsize, or are looking for more space and home amenities to make working from home easier, we have some ways you can still get the house of your dreams.
First, let's point out where we might see homes come on the market, and then offer some negotiating tips and ways for you to leverage advantages you may not know you even have. We have nearly 60 years of combined experience successfully closing real estate transactions and we can help you even more, if you'll reach out and let us know your specific criteria. If you need to buy a home and are considering a new home, we have great guides published this year and we have relationships with all the builders in the area. Call My NC Homes (919-451-7868) today for more details.
Step 1: Finding a Raleigh-Durham Homes for Sale
1. MORE VACCINES MEANS MORE HOMES LIKELY ON THE MARKET
Many sellers who were downsizing were in the demographic most affected by the Coronavirus and they paused moving plans to limit exposure of people in their homes. From health concerns about the pandemic to financial uncertainty, many homeowners that decided not to move last year, will be listing their homes this year. Potentially with added impetus to sell, since spending a lot of time at home. Now that vaccines are being distributed, many potential sellers are eager to take advantage of the current sellers market. Danielle Hale, Chief Economist at Realtor.com, notes:
"Fortunately for would-be homebuyers, we expect sellers to return to the market as we see improvement in the economy and progress against the coronavirus."
2. NEW HOMES/EXISTING HOMES HITTING THE MARKET
2020 was a strong year for builders. We offer new home guides in Apex, Cary- Morrisville, Durham, and Chapel Hill, and we almost cannot keep up with the new projects that are being approved. According to the National Association of Home Builders (NAHB), 2021 is expected to be even better. For 2021, NAHB expects ongoing growth for single-family construction. It will be the first year for which total single-family construction will exceed 1 million starts since the Great Recession. With more homes being built, homeowners looking for new houses that meet their needs will be able to move into their dream homes, and their old homes will create opportunities for those looking to find a home that's already built.
3. PROPERTIES RESULTING FROM FINANCIAL STRAIN
Experts don't anticipate a large wave of foreclosures coming to the market, considering the forbearance options to current homeowners. Homeowners that are impacted will, however, need to move this year. Those homeowners that did not take advantage of available forbearance and were already considering moving will place homes on the market, especially considering the market. Lawrence Yun, Chief Economist at NAR, explains: "Given the huge price gains recently, I don't think many homes will have to go to foreclosure; I think homes will just be sold, and there will be cash left over for the seller, even in a distressed situation. So that's a bit of a silver lining in that we don't expect a massive sale of distressed properties."
Here are three areas where we will see increases in homes for 2021. The housing demand will continue to be high and the supply is low, even with new homes to the market. To get your offer accepted, it should be the cleanest offer possible. Here are our top tips for clean offers.
No strings attached, or contingencies. Your offer should not include contingencies, such as the sale of your existing home and financing and appraisal contingencies should be sorted prior to making an offer. You can do this easily by getting pre approved for as much as possible prior to writing an offer.
Foregoing Inspection Contingencies: Only forego inspection contingencies if your seller provides recent inspection reports, please see our complete guide to home inspections for 2021 to make sure that you are being careful with this recommendation.
Bigger DD deposits (Due Diligence Deposit) In North Carolina buyers pay a non refundable amount to the Seller promptly after receiving the contract. Currently for properties listed at $500,000 or less buyers should expect to offer between 5%-10% of the list price; so you want to be certain this is the house you want. In return for this fee, the buyer receives a period of time (think 2-3 weeks at most) during which they have the opportunity to terminate for any or no reason at all. This is the time in which the inspections and appraisals are done and based on the results a buyer may attempt to renegotiate with the seller. If the buyer isn't happy with things they can terminate however the DD fee is forfeit. If the Buyer closes this fee is considered part of the down payment. The higher the DD fee, the more confidence the seller has that you are serious about buying their home. Earnest Money is typically escrowed by the Buyers closing attorney and is returned to the Buyer should they terminate during the diligence period. If a buyer fails to close after the diligence period has expired then this is also forfeit to the seller. Earnest Money deposits are usually between 2-4% of the offered price. Your agent should offer you guidance on these deposits.
Be prepared to offer above the list price and discuss with your agent if there may be any other options that would appeal to the seller. An example might be to close and allow the sellers to remain rent free in the property for a period of time. When you are dealing with a multiple offer situation as a seller, some offers that are far above asking, might have other terms that are not favorable to a seller. Be confident in your realtors suggestions. There are times when the terms of the offer can save a buyer many thousands of dollars as not every seller values things the same way.
Waiving Appraisal Contingency. This is one of the biggest risks financially and you will need to be relatively sure that you are in the position financially to cover the difference between appraised price and offered price.
Cash Offers. Cash without contingencies; is almost always the preferred offer. Offer to closes quickly. (Under 3 weeks) For sellers cash offers mean a quicker closing and no concerns about appraisals./em>
- Consider New Construction. New construction allows a buyer to avoid finding themselves in a competitive bidding situation, the only downside is it can take between 5-8 months to close on a new home. On the upside, you get to pick the floor plan and finishes you want and you get a new home that is likely more energy efficient and will require little in the way of maintenance or repairs for the first 5-7 years.
- Consider Using An Escalation Clause. Your agent can discuss these with you but basically your offer will include a separate addendum stating that you'll beat any bona fide offer by a state amount up to a maximum price. With Escalation clauses it's important that both your agent and the listing agent have experience with these and are willing to work with them as not every agent is.
BE PREPARED TO LOSE AND MOVE ON.
If you do find yourself in a multiple offer situation you need to realize that there's a chance despite all your best efforts that the Seller will select another offer over yours. Understandably this is both disappointing and stressful, but there's alway new listings coming on the market so don't despair. Discuss with your agent what you might do the next time to make a more compelling offer and keep looking.
Would you like to learn more? Do you have any comments or questions for My NC Homes? We would love to hear from you. Please comment or reach out to us directly at 919-451-7868Posted by Larry Tollen on