If you are a homebuyer in the Richmond Virginia real estate market in 2022, you know how crazy it is! You have maybe 15 minutes to look at a house, and when you walk out the door of the house you just looked at, there are 30 people standing in line to get in to the house itself! Offers are being reviewed by the seller on a Sunday or a Monday BUT the seller reserves the right to accept an offer before that time! You really cannot think about the house too long before making a decision! And you can't even look at it for the first time until Thursday or Friday! And then once you do decide to make an offer on a house, then you know you are probably going to compete with all those buyers you saw standing in line when you left the house on Friday! So what are you supposed to do???
This blog post is intended to let you know everything that buyers are putting in their offers in order to win them! As a Buyer Agent, it is sometimes hard to recommend that my buyers do all these things! So before you start looking at houses, you need to sit down with your Buyer Agent and talk about each of these things that are being done to win the bid! You need to decide what you are comfortable putting into your offers and what you are not comfortable putting into the offers!
Make Sure The Seller Knows Your Offer Is Secure!!! This is probably the most important thing to put into your offer. All sellers want to know that should they decide to accept your offer, that it will actually close!
Offer The Highest Price!!! Of course, it is hard to know what is the highest price as you aren't going to really know what everyone else is offering! An escalation clause can help here, but that still doesn't always guarantee that you are offering the highest price!
Pay Cash!!! Not all buyers can pay cash, but if you have the ability to pay cash for a house, that may top all offers, even if the price you offer is lower than the other offers!
Cover Some Or All Of The Appraisal Gap!!! If you bump the price up over the asking price, there is a chance that the appraised value will be lower than the purchase price! Some buyers are willing to bring additional cash to closing to make up some or all of the difference between the appraised value and the purchase price agreed to with the seller!
Add an Escalation Addendum/Clause To Your Offer!!! An escalation clause/addendum is something that will automatically amend your offer in the event that there are multiple offers on the house! What this escalation clause/addendum says that in the event of multiple offers, you agree to automatically amend your offer by a certain amount (say $1,000) over the highest net bona fide offer, not to exceed a certain price point!
Waive The Inspection Contingency!!! I know it is hard to agree to not do an inspection, or do an inspection but not have the ability to terminate the contract and/or ask the seller to do repairs on the house! There are inspectors in the area that will do what they call a "Walk and Talk", meaning that during your 15 minutes or half hour showing time they will look at the major things that you may be concerned about (crawl space, roof, attic, etc) and verbally tell you what they see so that you can be comfortable waiving the inspection! Or you could only do a limited amount of inspections such as radon, structural, mold! Some buyers will do a complete inspection, but agree to not ask for any repairs under a certain dollar amount!
Give Short Time Frames!!! Unless the seller requests a longer closing time frame, you should make sure that you can offer the seller the quickest time frame for closing, appraisal, inspections and other contingencies that you can! Instead of waiting 15 days to have the appraisal ordered, perhaps you have it ordered as a Rush within 1 business day of contract ratification! Have your lender gather all documents and send to the underwriter to get the underwriters approval even before you look at houses so that closing can be done in a few weeks, rather than a month or two!
Offer The Seller A Free Rent Back After Closing!!! If the seller is still living in the house, you may want to let the seller stay in the house after closing at no charge! This will allow them time to move out after they close on their new home!
Offer To Do The Inspections That The Seller Would Normally Do!!! In our area, the seller is usually responsible for doing the well, septic and termite inspections! Rather than having the seller do those inspections, you agree to have them done during your inspection period!
Offer To Pay Some or All of The Seller's Costs!!! This is a new one that many buyers have been doing lately! But you will want to make sure that you are comfortable with how much extra money you will need to bring to closing!
Cash For Keys!!! This goes back to the foreclosure days. Here you are saying to the seller that they don't have to leave the house in broom clean condition. This may be particularly attractive to a seller who has lived in their home for many many years!
Pay Seller Extra Money To Accept Your Offer!!! The other day I heard about a buyer who offered the seller an additional $3,000 above the offer price IF the seller would accept their offer! Again, this is another area where you would probably have to bring that extra money to closing as it cannot be financed in with your loan!
Have The Strongest Financing Possible!!! If you are competing with other buyers for the same house, the seller will look at everything on the offer! And sometimes, you may have 2 offers which are almost identical to each other in terms of price, terms, etc but the loan type ends up being the deciding factor! Make sure that you use the strongest possible loan type you can!
Strong Earnest Money Deposit!!! When you write up your offer, you will need to provide an earnest money deposit! That money is held in trust by the attorney or Realtor and when your closing happens, that money will get applied to the cash you have to bring to closing! Instead of giving a 1% deposit, you may want to consider bumping up that amount to may 5% or 10%! And some buyers are even making a part of the deposit non-refundable - meaning that if for any reason the home does not close, the seller will retain that nonrefundable portion of the deposit!
No House Sale Contingency!!! If you have a house to sell, in a multiple offer situation, you probably should not be putting in a contingency for the sale of your house! Talk to your lender to see if it is possible for you to be pre approved without having to have sold your house! Another option is to sell your home first and see if the buyer will allow you to retain possession for a period of time after closing! A third option is to sell your home and then move into a rental! These are all options you should discuss with your Realtor before beginning your home search!
As you can see, there are things that you will need to do to make sure you can win a bidding war! You may not be comfortable doing all these things, but before you begin your home search, you should talk to your Realtor and your lender to decide just what you are comfortable in offering when you do find that perfect house!
If you are thinking now is the time to buy a house, and you have questions, feel free to contact me and I would be happy to meet with you and talk about strategies for buying your home!