Last Wednesday I was interviewed on KTAR radio about the current state of the housing market. I was asked:
How low is the current inventory of homes for sale?
Are we in a housing bubble with prices ready to drop?
KTAR replayed the interview throughout the day, talking about the challenge homebuyers face in today’s ultra competitive, absurdly low inventory market. You can listen to my interview below. It’s only a few minutes.
At my firm (Hague Partners) we sell 40-50 homes a week, mostly representing sellers (except when our sellers want to buy). We use our proprietary 72SOLD auction-like process where potential buyers are identified first, then placed in a competitive environment where they bid against each to see who is willing to pay the most.
Because we mostly represent and advise sellers, we have become experts at what buyers can do to increase the probability our sellers will choose them. Surprisingly, it’s not always just about price.
If you’re trying to buy a home in this super-hot sellers’ market (or know someone who is), here are 10 ways to increase the chances you’ll win your perfect home:
1. Don’t only get a standard “pre-qualification” letter from your lender. In addition, have your lender write a personal letter on your behalf touting you as an extra special “solid gold, highly qualified” buyer – one that any seller would be fortunate to have.
2. Ask your lender to call the listing agent before you submit your offer. Your lender should “sell you” to this agent, reinforcing what they said in the personal letter.
3. Ask the listing agent what terms other than price would make your offer perfect for the sellers. What closing date do they prefer? Would they like to have a few days (or weeks) possession after closing?
4. Put up a large, impressive earnest money deposit. Earnest money is typically refundable if you don’t approve the home during inspection, or run into an unexpected glitch obtaining a loan. Big deposits (even though they are refundable) impress sellers.
5. Consider making an “as is” offer, saying you won’t ask for repairs as a result of the home inspection. You should still retain your right to do an inspection (have it conducted by an expert) and cancel if you’re not satisfied. While I hate to say it (because we primarily represent sellers), “as is” doesn’t prohibit you from asking for repairs if you find something unexpected.
6. Make sure your agent is extra nice to the listing agent. Don’t underestimate the inclination of a listing agent to recommend a buyer to their seller because they feel a connection with the buyer’s agent. People naturally want to do business with people they like.
7. Don’t presume you are overpaying if you have to pay above appraisal. Remember, appraisals are based on past sales. With homes currently appreciating 1%+ a month, the home you buy is probably worth more than an appraisal based on past data. Also, because you typically wait 30-45 days between when you buy and close, your new home will likely go up 1%+ in value before you own it.
8. Write a personal letter humanizing yourself and your family to the seller (delivered with your offer). Talk about how much it would mean for your family to be the new residents of the home. Include photos if you have kids, grandkids, or pets. Sellers often have strong emotions connected to their home. They are more inclined to sell to people they believe will appreciate and enjoy it. If you lost out on previous homes or have faced other challenges, you might evoke sympathy by mentioning that too.
9. Sign up on websites like SeeHomesFirst.com (we own this particular one) where you learn about newly listed homes before they are in MLS or marketed to the public. We list 5-10 homes a day and send an auto-text notification about them to buyers who use that website. These buyers have a huge advantage.
10. Don’t be decimated if you lose the first, second, or even third home you try to buy. New homes come on the market every day. You may lose one you love, only to find another one that you love more. It happens all the time. I know it’s hard, but try to temper your emotions until you finally do buy a home… then celebrate big!
In summary: “Buying a home in this market is like juggling cats while walking blindfolded on a high wire over a shark infested moat after drinking three martinis.”