It’s always a painful phone call to make to a buyer client: “I’m so sorry but your offer was not accepted.” All too often, this is the outcome when it’s a Seller’s Market. But why?
First, let’s identify what a Seller’s Market looks like:
- Low inventory
- Rising property prices
- Multiple offers
- Fast sales
- Expansion in home building
On the flip side, a Buyer’s Market looks like this:
- High inventory
- Stalling prices
- Financing and affordability constraints
- Foreclosures and short sales
- Reduced home construction
You don’t have to be a feral hog on “Stay Home” orders to know that, on the Big Island, we are definitely in a Seller’s Market. This is the case in most of our nine districts, especially when it comes to low to moderately priced homes. There just isn’t enough inventory to meet the high demand. Case in point: I had sellers in Captain Cook with a home listed below $400,000.00. It was priced to sell quickly. After two back-to-back 3-hour open houses we had ten offers! The cash buyer won out, and above asking price!
Another case in point: My first time home buyers had the budget to offer over asking price on a particular home. We knew there were other offers coming in, so I discussed with them the possibility of making an offer above asking price. (Remember, we are in a Seller’s Market.) They didn’t, and they lost out to another buyer who did. And, they were heartbroken!
SIX RECOMMENDATIONS TO AVOID PAINFUL BUYER BLUNDERS:
- Don’t delay! The early bird just may get the worm…or the property in this instance. Time is of the essence. Be ready to make your offer quickly. You should have your proof of funds available. You should have a pre-approval letter from your lender. (Not a pre-qualification letter! A pre-qual is a soft credit check which often doesn’t reveal credit issues that you may not be aware of.)
- Cash is king! Why?
~ Because it eliminates the appraisal process which slows down the closing of escrow.
~ When a seller sees proof of funds at the start of escrow, they don’t have to worry about a buyer who can’t ultimately get their funding.
~ Sellers have more confidence in a cash offer.
- Remove contingencies you can live without. Clean the home yourself. Accept the home As Is. (But, still have your certified inspection.) Pass on the survey or staking IF the property warrants it.
- Minimally, offer full price, and if possible, over full price – especially if the home is newly on the market, and the CMA (Comparative Market Analysis) indicates the list price is supported by the sale of similar homes in the area. But, even if it is slightly inflated, grab it if you can afford it, and it meets your criteria.
- Offer the shortest closing date you can. If you are going with a lender, and you are pre-approved, you have already saved time. Your lender will tell you how quickly you can expect to close escrow.
- Require a shorter window of two days or less for the seller to accept, counter or reject your offer. This minimizes the time another offer can come in.
Does this sound aggressive? Yes! Does it work? Yes!!! Not every time, but often. If you are serious about purchasing the property of your dreams, then you must be like a dog on a bone to make it a reality. A good Realtor® will guide you. But, will you let her/him?