Dejected: That feeling you get when you finally find a home you want to purchase and your agent tells you that there are multiple offers on it. You’re not alone; there are plenty of dejected homebuyers in the current Madison real estate market.
Here it is only June and yet the nation’s housing market is hotter than July. And, although buyers across the country are having a tough time of it, they should be thankful they aren’t looking for a home in Madison.
After all, they have about 103 days to look before homes are snatched up, according to The Capital Times’ Lisa Speckhard. Here in Madison? Move quick because homes priced less than $250,000 are being scooped up within 10 days of being listed.
By the way, although this is bad news for buyers, sellers couldn't ask for a better market. If you're considering selling your Madison home, please contact us. Current inventory is so low and demand is so high that homes are selling rapidly and many for over asking price. The Fed meets this week and interest rates are expected to rise (either at the June meet or the one in late July), so you can't pick a smarter time than right now to get your home on the market.
It is, in fact, home buyers' fears that rates will rise, especially for those looking for starter homes, and the very sad fact that we just don’t have enough homes for sale, that it’s a fast and furious Madison housing market.
What’s worse is what’s happening with high-demand homes – those in popular areas that are in good condition and priced right. It’s not at all uncommon for those homeowners to be the recipients of multiple offers and finally selling for well over their list prices.
Among the many challenges that come with being just one of a number of buyers interested in a particular home is the not-knowing. How much have the others bid? What type of terms did they offer the seller? What would motivate the seller to choose your offer above all the others? It’s like flying blind.
Ok, so it is what it is and the intrepid homebuyer is usually willing to tough it out. For you, I’ve put together a list of ways to beat the competition in a multiple offer situation.
1. Take the baby steps first
You won’t win a bidding war without a battle plan. That plan includes taking certain steps, in order, and the first step is to see a lender to obtain mortgage pre-approval. Unless he or she has received lousy advice, no seller in today’s Madison real estate market will entertain an offer submitted by a buyer who doesn’t even know if he or she can qualify to buy the home.
Understand that you may be competing against buyers who are willing to pay cash for the home. Not that all-cash offers always win – because they don’t. But sellers find them highly attractive and will prioritize them over all others.
As well, you can count on a certain number of buyers who fail to take the financing step and you’ll be way out in front of them with your pre-approval.
2. Hire the right real estate agent
Now is not the time to hire your aunt Tilly just because she’s family, or your nephew because he’s new in the business and you want to help him out. Now is the time to hire a battle-hardened veteran of the real estate wars. In fact, your agent can make or break your success in a bidding war.
Often, because of our vast network, we at Lake & City Homes know about homeowners planning to sell their homes long before they list them. This network of contacts within the industry also acts as our ears on the ground, listening for rumbles from other agents in town, holding pocket listings (those which, for any number of reasons, aren’t yet in the MLS). Knowing about new listings first is half the battle.
3. You need insider information
Ensure that the agent you hire has a system whereby you are notified immediately when homes that match your criteria go on the market. These email alerts are invaluable in a tough market because being among the first foot in the door gives provides an advantage.
Fill out the form here and we’ll contact you when a home that fits your needs is listed. Also, be sure and bookmark this page, and check it frequently. Here you’ll find each day’s new listings, and the page is updated every 15 minutes.
4. Don’t hesitate
Many Madison homeowners won’t entertain offers until during or after the first open house. This means you’ll need to be available on weekends to tour any homes that catch your eye.
If the homeowner is taking offers randomly, you’ll need to act fast when we find one that suits your needs. It’s a pretty safe bet that if you are attracted to the home, others are as well.
5. A clean offer is the best offer
At least in this super-heated sellers’ market, the best and most attractive offer you make will be “clean.” This means that you aren’t overly picky, you won’t ask for concessions and the price you offer is your highest and best.
Imagine that you are a homeowner of a very popular listing. You have multiple offers spread out on your dining table and it’s time to choose the one you like best. Sure, you’ll look at the offering price first.
This is why it’s so important to come in with a strong offering price.
Next, your agent will counsel you to look at the terms of the offer. Is the buyer pre-approved for financing? You will look at the contingencies. For instance, is the time requested to complete inspections acceptable to you? Is the buyer making the offer contingent upon the sale of his current home? Contingencies are stops along the way to closing wherein the deal can possibly fall apart, so the fewer the better and the quicker they’re removed, the better as well.
We never suggest that our buying clients waive the home inspection, but you also don’t need 30 days to complete it. Shorten up those time lines and you’ll have the seller looking twice at your offer.
As well, you could offer to take the home as-is. This doesn’t mean you’ll waive the home inspection, it just tells the seller that you won’t be asking for him or her to kick down money for any necessary repairs. Yes, there is a risk to this strategy, especially if you’re obtaining an FHA or VA loan. Both government entities require certain repairs to be made before closing. Keep in mind, however, that you can still bail on the deal if the home turns out to need repairs that are unacceptable to you.
Many buyers today require seller concessions – a financial contribution to the buyer – to purchase. Unfortunately, these don’t go over well in a sellers’ market unless all other offers include them as well. And, if you must ask for concessions, don’t offer less than asking price.
Do they want a quick closing? Do they need some time to retain possession and rent back? These are all things that are important and evaluated when a seller looks at multiple offers.
That seller perusing his multiple offers will be looking for a clean, contingency-free offer at full price. The fewer contingencies you include in your offer to purchase, the more attractive it will be to him. If you really want the house, now is not the time to be picky and ask for multiple concessions.
If the listing agent is smart, he or she will counsel the homeowner on how to read offers to purchase and suggest that price isn’t always the whole ball of wax. The smart agent with a smart seller will consider other aspects of the offer before settling on one.
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