Photo Credit: Shutterstock

One of Compass Real Estate’s Core Principles is “Learning From Realty.”  While this is a rule the company uses in listening to us, as agents, it’s also a good rule of thumb for agents. After losing a number of multiple-offer bids, here is what I have learned while representing buyers in the most competitive market in the US.

With the stiff, almost cutthroat, competition we are seeing in Austin's housing market, here is a list of best practices that we will use to ensure you have the best chance of actually winning the house of your dreams.

1) Be prepared to offer well over asking.  Since January 2021, I have been seeing homes selling for 10 to 25 percent or more over the list price. That may mean we need to search for homes that are priced significantly below your approved budget in order to even have a shot at winning.

2) Waive your right to terminate if the property doesn’t appraise. The truth is, with prices escalating so quickly, homes will not appraise.  Why? Because coms are lagging indicators. Appraisers use SOLD comparables when determining appraised value and they look back six months.  That means the houses selling today are outpacing the comps. It will take several months—at least—for comps to catch up. But, if you want to win, you must be ok with waiving an appraisal.  NO ONE is accepting offers that are not using the appraisal waiver.

3) Make sure you have the cash to make up the difference between the appraised value and the contract price.  Sellers will require you to show proof that you have that cash on hand—called proof of funds. Typically, this means showing the seller a copy of your bank statement with a cash balance that is in excess of the cash down payment PLUS an amount sufficient to cover the appraisal gap.  Without this, the seller will reject your offer.

4) Waive buyer’s approval. Whoa! What? If you are not paying all cash for your new home, you should have gone through underwriting with your lender so that you are FULLY approved and ready to go. Sellers want guarantees that you are able to complete the transaction and will not terminate because you can’t get approved for the loan. This is RISKY, but as long as you feel secure in your ability to complete the transaction and you have that discussion with your lender, making a contract NOT subject to you being approved will give you a competitive edge. As a reminder, a pre-approval letter from your lender MUST be submitted with your offer. Using a trusted local lender is critical and can be the difference between winning and losing the bid.

5) Pay for all the “seller” expenses. This is a big one. In a normal market, it is common to write a contract with the seller paying for the owner’s title policy, a new survey if needed, a home warranty, HOA documents and transfer fees. Forget about that in this competitive environment. Those expenses have always been negotiable, but today, I recommend all buyers offer to pay these expenses. Remember, the goal is to make your offer most attractive to the seller.

6) Increase your earnest money to at least 2 percent if not more. If the contract terminates, the earnest money is returned to the buyer in most circumstances, so it’s a fairly low-risk strategy. To the seller, it shows you have more “skin in the game” and can be a competitive edge in helping you win. Remember, if the deal does go through, this money is credited to your purchase price and closing costs.

7) Offer a VERY large option fee for as few days as is reasonable. I have seen some contracts waive their option period. I DO NOT recommend this unless you are a builder, an experienced remodeler, or perhaps if you are buying new construction or are going into a home that you know you plan to totally remodel. Otherwise, I can’t, in all good conscience, recommend this. Instead, offering a very large option fee ($5,000, $10,000, etc.) for a few days is a good strategy.  The key is to have an inspector lined up and ready to go the minute the contract is executed and knowing, what, if anything, would cause you to walk away.

8) Get creative. Some buyers in today’s market have even offered to pay the agents’ commissions and the sellers’ moving expenses just to win the deal. What extra things can you throw in to the offer?

9) At the end of the day, cash is king.  Paying all cash for your home is one of the best competitive strategies available. Not everyone can do this of course, but if you are in a position to do that, do it and be prepared to show proof of funds.

10) Pray. It can’t hurt!

For more information, please contact Barbara Van Dyke at 512-431-2552 or barbara.vandyke@compass.com

Barbara Van Dyke is the exclusive agent representing the Austin, Texas real estate market as a member of the Haute Residence Real Estate Network. View all of her listings here.

The post Barbara Van Dyke On Winning Competitive Offers In A Seller’s Market appeared first on Haute Residence by Haute Living.

What do you ask clients to not have displayed when showing their home for sale?

I advise them to avoid too much clutter and personal objects and mementos, so people can focus on seeing and feeling the home. Otherwise, potential buyers can get distracted or get a less than positive impression of the home.

Photo Credit: Daniel Nadelbach

How did the second quarter of 2020 real estate perform in New Mexico?

Since we opened up after New Mexico's COVID-19 stay-at-home orders, the flood gates have burst open. We had one of our best quarters ever, due to pent-up demand from the shutdown and with buyers wanting to move here from larger cities. It has been very, very busy in ALL price ranges, high and low, which is somewhat unusual. But of course great to see.

Is it currently a buyer or seller’s market in New Mexico?

Mostly, a seller's market due to lower than normal inventory – but it's all about pricing the home right. The market here is still very price-sensitive: as long as the home has good features and is priced right for the market, it will sell quickly.

What do you love about the housing market in Santa Fe and New Mexico overall?

We live in such a beautiful part of the country, and Santa Fe is truly a unique destination in all of the world, so it's easy to be passionate about the quality of life here with clients. And that is what is becoming more and more important to people as they reassess their priorities during the pandemic – healthy living, safety, and quality of life. New Mexico is a gorgeous state, and Santa Fe especially offers a wonderful, spacious alternative. We have nearby mountains for hiking and skiing, incredible cultural events, world class restaurants and a cosmopolitan vibe, yet it still feels like a small, friendly community. I think the market is very strong here right now, though we have low inventory which may become less and less as we move through 2020. But all in all, there's so much to love about Santa Fe that I believe there will always be a demand and much interest in becoming part of the community here.

For more on the New Mexico real estate market, contact Darlene Streit by clicking "Learn More" above.

The post New Mexico Real Estate During Second Quarter Of 2020, With Darlene Streit appeared first on Haute Residence by Haute Living.