The phenomenon of multiple offers, a situation in which multiple buyers submit bids for a house and end up competing for it, has returned.
It was prevalent in the strong market a couple of years ago and, now, with dropping prices, some sweet deals on distressed properties, relatively low interest rates, and an $8,000 federal tax credit for first-time buyers and a $6,500 credit for repeat buyers, some markets have heated up again. In fact, California practitioners report an explosion of competitive bidding, and in some places supply actually is shrinking and prices are ticking up.
The result is that some buyers who are anxious and able to enter the market still are losing out. For example, Andy Bencosme, 2009 president of the Arcadia Association of Realtors®, says one of his clients has bid on—and lost out on—12 properties.
Wondering How To Prepare?
Competent Advice: Seek Realtors® who can explain how competitive a market is, and where you fit with it, and who are able to prepare you for the process—and potential disappointments—ahead.
Investor Competition: You may be competing with investors delivering contingency-free, all-cash offers. Be prepared to deliver your best offer, if need be. Also, get pre-qualified for loans, have all paperwork in order, and know precisely how high you can afford to bid.
Hire a competent Realtor - Robert Prophet
No Automatic Low Balls: Despite market challenges, don’t automatically make offers dramatically below asking prices. If you’ve been eyeing a property that has seen multiple price reductions and you’re ready to jump, others likely have been doing the same. It makes for stiff competition. “Some think that if an asking price is $325,000, they can get that house for $250,000. That’s not the case,” comments Bencosme.
Study neighborhood comparable properties that are for sale and that have sold and consult with your Realtor to develop strong, realistic offers.
Buy Less: Just one reason to look at property below your means is that you’ll have money in reserve to bid up if you need to.
Short Sales: The process can be tedious and lengthy. One California Realtor says short sale acceptance dates can run two weeks to six months. Negotiating short sales can be tricky, so be certain your agent is experienced in the process. And know whether you have the stomach for such a route.
Bank-Owned Property: Again, you may be competing with investors. Work with your agent to determine properties’ worth. And Bencosme suggests making yourself as attractive as possible. That may entail offering a larger down payment, not requesting closing cost assistance, or agreeing to a shorter time- line.
The more you have your ducks in a row before making an offer, the more sellers will see you’re ready, willing, and able to complete the transaction.
For more information please contact Robert Prophet and the Robert Prophet Group. Send us an email or visit our web site: RobertProphet.com
