Hot Tips For BuyersTo Use In This Hot Seller's Market

I've recently been working with a lot of buyers and I've heard a number of them ask about the comps (comparable recent sales) of a house they are interested in putting an offer in on. There have been a number of times that once the buyers find out what the comps are for a house, whether it be from me telling them or the online Real Estate websites (zzznot the place to look for za compz!) that they base their offer on the average comp price. No no no no.....In case you were wondering, we are now in a seller's market and a very competitive one at that. If your goal is to get a house then you must try to be the highest and best offer. So if you are making an offer that is not close to, at, or above the highest comp out there, then truly, you are not in the market to buy a house at this time. If the house is priced well, and in a desirable area, and you make an offer at or under the listed price, you are most certainly not getting the house. I know that it is hard to come out of a market, where not too long ago, there were a lot of short sales to choose from and you could negotiate the home price with the seller, but that time is gone. And I highly urge anyone in the market to buy a home right now to go into the process with the goal of buying a home, and not trying to get "a deal".  The deals are still out there which is why the market is so hot right now. And here are the deals: the low loan rates, the houses (while going over list price a lot) may still continue to rise for years from now. Those are the deals. If you choose to look for any others, you may be out of luck and spend good time getting beat out of the market. And when putting your offer together, ask your Realtor what else you can put in your offer to make it desirable, other than the price.
There are many other things in the offer that you can include, or not include, that may get the seller's attention and get your offer chosen.  Here are a few things you should talk with your Realtor about concerning the offer:
1. Do you really need the refrigerator and washer/dryer? Maybe don't ask for those and if you really want them, maybe offer to purchase them separate from the home purchase.
2. Can you offer a shorter escrow time period? Seller's would love to see the money from the sale sooner than later.
3. Can you shorten your contingency periods and maybe do your inspections in the first few days? Or talk over the other contingencies with your Realtor and see if those may be shortened.
4. What about the costs for Retrofitting and certifications for this? Ask your real estate agent what this may cost and is this something you can pay for?
5. Home warranties are great! I recommend having one. The average home warranty may run $400-$600. Is the house you want to buy worth you paying for this yourself?
6. Ask your broker about the NHD report. This is usually at or under $100. Do you need the seller to pay for this?
7. And what about the termite and pest inspection and correction? Depending on what the inspection says, if you offer to pay for this, it could be in the thousands...but maybe this is something you are willing to do as a buyer?
8. And last but not least, and this one doesn't cost you a dime; write a letter to the seller with your intentions for the house, and be honest. Are you going to move into the home and make it your home for years to come? Are you going to care for the house and yard the way the sellers have done for so many years? While a letter like this may not mean much to some sellers, it may make a huge difference to others...and it's totally free.

Talk about all these options and more with your real estate agent and good luck with buying and selling your home. And when you are ready to list your house, I can walk you through the best way to get the best dollar for your home, so call me anytime.
                                                                      

Should I Remove The Contengencies In My Offer?

It is almost April of 2013 and the housing market out here in Los Angeles has become very competitive. There is a larger difference between the number of houses on the market and the number of buyer out there. Some of the areas I specialize in are getting large numbers of multiply offers on homes that are marketed well and buyers are needing to step it up if they really want a particular house. So what are some of the things that I'm seeing buyers are doing in hopes to get their offer accepted? Well, there is the almighty all-cash-king. This one seems to help the sellers accept an offer pretty frequently. But there aren't a lot of buyers out there that can buy a house with all cash, so what are the rest doing to gain a seller's interest? Well, quite frankly, some buyers are removing some or all of their contingencies on an offer to keep themselves in the running for owning a home. So what does removing contingencies really mean and is it something I should do in order to get a house? Well folks, this is a very slippery slope I'm about to discuss here.

First off, there are three major contingencies in a Purchase agreement, or an offer. There is the loan contingency, an appraisal contingency, and an inspection contingency. According to Merriam Webster's dictionary, the definition of contingent is-dependent on or conditioned by something else. 
These contingencies are put into the contract to protect the buyer from unknown obstacles that can occur during the purchase. Buyers are not 100% guaranteed that they will be able to get the loan they were pre approved for on any house. There are a lot of factors that determine whether or not a lender will actually give a loan. Therefore, there is a contingency for obtaining the loan. Same goes with an appraisal which is directly tied in to getting the loan. A lender needs to know that the value of the house is there before they give that amount of money out for a loan on a home. So, same thing again as before...that is why there is an appraisal contingency. And so on with the inspection contingency as well.

So, let me say it again...the contingencies are there to protect a buyer.  Just as a deposit is there to protect a seller. And guess what is at risk if you remove contingencies?...you guessed it. Your deposit.  But let's say that you've heard that if you remove a contingency that there are still time periods and other things in the contract that are there to protect you as a buyer. Well, yes and no. These decisions of removing contingencies should only be considered on a case by case, person by person situation. I would not feel comfortable as a Realtor just suggesting to anyone of my clients that they do this without fully explaining what it means and what the consequences could be.  And I surely would not throw this out blanketly as a strategic maneuver to get an offer accepted. Try to imagine like this: When purchasing a home you place your deposit in a box behind three brick walls. And lets say those walls represent those three contingencies.  If you start off your offer with one or more of those walls missing, that is the level of protection your deposit has left.  Now this way of going about writing an offer can work out very well for the right person, but please have this talk with your Realtor and get all the facts you can before moving forward with these options. And, just so you know, there are other ways of getting your offer accepted in this competitive market. After all, in the past month, I have had two offers accepted in a multiply bid situation and neither of them removed any contingencies and neither of them were the highest offer. I'm not going to give away my secrets here but if you are out looking to purchase a home right now, maybe you should give me a call!