It’s 2019, it must be a Seller’s Market, right?
Well in Dayton, that depends on the location and the price point.
Upscale homes can linger on the market or may need to reduce their price in order to sell, so if you are buying a home in that market, you can probably take your time. But in the more affordable price range, it’s definitely a Seller’s Market. How do you make a great offer in a hot Seller’s Market? Below are 5 steps provided by Freddie Mac and me, to help buyers make offers, along with some additional information for your consideration:
1. Get Pre-approved.
“Don’t even think of submitting an offer without a strong pre-approval letter.”
Getting pre-approved will not only show home-sellers that you are serious about buying, but it will also allow you to make your offer with confidence because you’ll know that you have already been approved for a mortgage in that amount.
2. Determine Your Price
“You’ve found the perfect home and you’re ready to buy. Now what? Your Realtor will be by your side, helping you determine an offer price that is fair.”
Based on your agent’s experience and key considerations (like similar homes recently sold in the same neighborhood or the condition of the house and what you can afford), your agent will help you to determine the offer that you are going to present.
3. Submit an Offer
“Once you’ve determined your price, your agent will draw up an offer, or purchase agreement, to submit to the seller’s real estate agent. This offer will include the purchase price and terms and conditions of the purchase.”
Talk with your agent to find out if there are any ways in which you can make your offer stand out in this competitive market! A licensed real estate agent who is active in the neighborhoods you are considering will be instrumental in helping you put in a solid offer. It’s not always possible, but I try to reach out to the listing agent to see if they can share any specific needs the seller might have. Perhaps they need a flexible closing date, or they would prefer occupancy after closing. If we can find out those details prior to submitting an offer, it can help. Buyers sometimes me about the effectiveness of a heart-felt letter to the sellers. I have seen that work, but I have also seen it not make a difference at all. Most sellers are more concerned with their bottom line and your ability to secure a loan and follow through on the purchase, than your emotional feelings towards their home, and a letter may not address either of those issues, and in fact it could put you in a weaker negotiating place if you overshare. Discuss with your Realtor to make sure it’s a smart move in your situation.
4. Negotiate the Offer
“Oftentimes, the seller will counter the offer, typically asking for a higher purchase price or to adjust the closing date. In these cases, the seller’s agent will submit a counteroffer to your agent, detailing their desired changes, at this time, you can either accept the offer or decide if you want to counter. Each time changes are made through a counteroffer, you or the seller have the option to accept, reject or counter it again. The contract is considered final when both parties sign the written offer.”
If your offer is approved, Freddie Mac urges you to “always get an independent home inspection, so you know the true condition of the home.” If the inspector uncovers undisclosed problems or issues, you can typically negotiate repairs that may need to be made with the seller or possibly cancel the contract altogether.
5. Act Fast
“The inventory of homes listed for sale has remained well below the 6-month supply that is needed for a ‘normal’ market. Buyer demand has continued to outpace the supply of homes for sale, causing buyers to compete with each other for their dream homes.”
Make sure that as soon as you decide that you want to make an offer, you work with your agent to present it as quickly as possible. This is a bigger problem in certain markets than others. For example, as I was writing this, I calculated the absorption rate for the zip code of 45420. The absorption rate is a calculation of how quickly it would take the current For Sale inventory to sell, if no other homes came on the market. We use the absorption rate to determine if we are currently in a strong buyers or sellers market, with six months considered a normal, or balanced market. For the zip code of 45420, in a price range of $85k-$145k, the absorption rate is 2.7 months! Good news if you are a seller, but that’s hyper-competitive for buyers. Don’t delay putting in an offer on a home you love!
Whether buying your first home or your fifth, having a local, full-time Realtor on your side is your best bet in making sure the process goes smoothly.