Here are five ways you can prepare yourself ahead of time to compete in a hot housing market when it comes time to present an offer.
#1. Make sure your finances are in order.
Placing an offer is not the time to be concerned about whether or not you are approved for a home loan, have money for a down payment, inspection and closing costs, and how much money you can afford in a mortgage payment each month. You should already have all of these figures in place and ready to go before even looking at one home. Having all of your finances in place ahead of time means that your offer will get looked at first, and if attractive enough, the seller will know that you've already done the financing homework necessary to afford the home. This means you want to speak to a lender about getting preapproved, have a preapproval letter ready to submit with the offer, have cash in the bank for a substantial down payment/earnest money deposit and have extra money for a home inspection. Letting the seller know you are ready to go financially eases their mind that the deal is likely to close.
#2. Submit a solid offer.
While you may not always be the first offer, you can submit a fast and strong offer. Make sure you don't insult the seller by asking for everything under the sun with a lowball offer. This is not the time to submit a lowball offer. Have your real estate agent understand the market in the neighborhood and submit a quality, strong offer without undervaluing the property. If you come in either at or just slightly below the asking price, most sellers will know you're serious. Make sure all of the dates comply and agree with the seller. Try not to set out the closing date months in advance but a decent, reasonable closing time with favorable terms.
#3. Consider an escalation clause.
In seriously hot markets, and Portland have a lot of micromarket neighborhoods around the area that are incredibly hot, you might want to consider an escalation clause. This means that the buyer is willing to increase their offer if there are other bids up to a particular Price. Let's say that it's a $400,000 house. You're willing to offer $5000 over the highest asking price up to $430,000. The only drawback to this type of strategy is that you'll have to make sure the property appraises for the escalated amount otherwise you'll have to make up the difference.
#4. Let the seller know how much you love the property.
Sending a personal letter may seem almost taboo in today's society and something done years ago to impress the seller but it might actually work today. Simply sending a letter, a picture of your family or appealing to a soft heart could get your offer approved. Of course, this is not the end all and it shouldn't be your only line of defense but it certainly can't hurt to let the owner know how much you love their home, appreciate the care and maintenance they've put into the property and how you're planning on keeping up the property for the good of the neighborhood and society.
#5. Consider a pre-inspection.
This can be a tricky situation because in a hot market, low-priced homes tend to sell faster than you may not have time for a home inspection before placing an offer. However, you can certainly ask the seller if you can perform a pre-inspection before making an offer to save time later on and so that your offer is serious without a lot of contingencies. As with any offer you'll want to verify all the logistics, legalities and terms with your real estate agent. Using a dedicated buyers agent means that your needs, your price and terms will be the top priority.
If you really want the home, use the tactics here to get your offer to rise above the rest. To get started with your financing preapproval please contact The Palmer Team in Portland today or start your application process here for free.