I work a lot of open houses, which means I get plenty of face time with potential buyers. Visitors to open houses come in all shapes and sizes- those that have just started looking, neighbors who want to check out the new house for sale, and the battle-hardened who have already been putting in offers for a while, with no success. One question that seems to come up no matter who is asking is the Big Question of the Day: when will the market start becoming sane again?
The short answer is that everybody has guesses and nobody knows. Helpful, huh? You can spend all day attempting to read the tea leaves, and some do. There’s the effect of interest rate hikes, new housing starts, average days-on-market for new listings, the price of lumber, and on and on. The truth is that nobody knows- and if you think you’re starting to see a trend forming you won’t know for months whether it’s a trend or a blip- and that’s just not helpful for those out there trying to buy a house right now, facing the immediate pressure of a hot sellers’ market.
Instead of trying to time the market- which doesn’t work with stocks and doesn’t work with housing- my advice for potential buyers is about how to make your offers stand out and be competitive. The market can look daunting enough to just want to curl up in a ball and NOPE on out of the search, but with a good strategy and plenty of knowledge it becomes manageable. Nobody should march into battle without a plan.
In a nutshell, here’s the advice I give potential buyers about how to make their offers stand out from the crowd:
- Priorities 1, 2 and 3: Financing. Get those ducks in a row before you start seriously searching. Without a pre-approval no offer will be taken seriously, and it’s even more helpful if you can do upfront underwriting. This will allow you to close faster and therefore be more competitive with those all-cash offers. Talk to a reputable local lender right away. They don’t bite.
- Appraisals Matter. Nobody likes appraisals, but they’re often necessary to securing your loan. In this day and age of houses selling for unprecedented prices, the chance of your house being appraised lower than the purchase price is significant. That can derail your loan. Buyers need to have a plan to address this by either waiving the appraisal contingency or promising to cover an appraisal gap to a certain amount.
- “Let’s Talk.” When I’m putting in offers I ALWAYS contact the listing agent to find out what is important to the sellers. I may not get any good answers but if I’m not asking, I’m not doing my job. The obvious answer is the obvious one: $$$. However, maybe they also want post-closing occupancy, or a quick close is a priority, or they don’t want to do repairs? Finding out what matters to the seller- and crafting your offer to address those points- makes your offer stand out.
- “I Can’t Believe That House Sold for $100k Over Asking!” Forget about how much over asking houses are going for. It’s easy to fixate on because it’s sexy, but it’s a distraction. Houses are priced for marketing, not necessarily as a true reflection of what sellers believe they’re worth. There are two questions to consider: what do the relevant comps and current market conditions say it is worth, and, more importantly, what is it worth to you. Those can be tough to answer, but it sure does matter when deciding what to offer.
I’ve got a few more tricks up my sleeve, but these are the major points. You make the process smaller and simpler by having a plan. With that knowledge and preparation banked, you’ll be confident that you can compete when the time comes and you get to focus more on the fun part: simply finding the house that’s right for you.
About me: I am a licensed Realtor in the state of Oregon. For business inquiries I can be emailed at eli.cotham@eleetere.com or found on the web at eliknowsrealestate.com.
