The sports world is on the cusp of one of the most exciting times of the year – March Madness, the Masters golf tournament, and Major League Baseball spring training. But there’s another season about to begin that’s likely to be just as competitive and high stakes – especially for you and some of your clients.
With Presidents’ Day in the rearview mirror and the weather about to trend warmer (hopefully soon), it’s now officially home buying season. And this year, it could be as cut-throat as ever.
A combination of low inventory, high consumer demand, and historically low interest rates will fuel a more competitive housing market than usual. That’s great news for sellers and agents. But potential homebuyers won’t have home-court advantage in this year’s spring housing season. In order to score the home they want at a reasonable price and within their budget, they’ll need some help from you.
- According to a new survey by the National Association of Home Builders, about 40 percent of home buyers said the primary reason they haven’t bought a house yet is that they keep getting outbid by other buyers. A year earlier, 44 percent said unaffordable prices were the biggest reason they hadn’t bought yet, and only 19 percent cited getting outbid.
- In another survey by Redfin, 56 percent of buyers faced bidding wars on their offers in January 2021. That is up from 52 percent just a month earlier. Also, more than half of homes are now going under contract in less than two weeks. That’s fast.
You know from experience that some clients looking to buy can get frustrated and impatient with the process. Sometimes it takes a long time to find just the right house. Other times, they get lucky (with a little help from you) and spot their dream home, only to get outbid by someone else or have the deal fall through because of a bad inspection report or other issues.
So as you head into home buying season and look to find potential buyers for your long list of listings, you’ll need to coach your buyer clients on how to win the bidding war. Sometimes, it takes more than just being the highest bidder to get the victory.
Here are some strategies that should be in your playbook this spring to help your buyer clients:
- Act fast: Just like any other attractive product, the best homes sell quickly. If your buyer seems to be an “I’ll know it when I see it” type of consumer, encourage them to make an offer the same day you show them the property. Especially if you know there is lots of other interest. To get a jump-start on other potential buyers, tell your clients that if they see a “home for sale” sign on a property they know they’d be interested in, they should contact you right away instead of waiting for the listing to show up online.
- Get pre-approved: Encourage your buyers to get pre-approved for a mortgage before they even start home shopping. That way, they’ll already know how much they can borrow, which will dictate how high they can bid.
- Inspector gadget: Tell your buyers to have an inspector already on deck before they begin house hunting. If they find what they want quickly, they can get the process moving if they are prepared.
- Count the costs: Suggest that your buyer factors in taxes, insurance, maintenance, and other costs, in addition to their payment, before making an offer. Math matters.
- Go big or go home: The sellers want serious offers. So your buyers should come with their strongest offer right out of the gate. A sellers’ market isn’t the time to work too hard to get a deal.
- Pay closing: Encourage your clients to avoid asking the seller to help pay for closing costs. The more hoops the seller has to jump through to take your offer, the less likely they are to take it. Especially if they think they can command more money from someone else.
- Play the short game: Suggest that buyers consider shortening contingencies for inspection and appraisal or be willing to negotiate on repairs to appeal to the seller and shorten the entire process.
- Write a love letter: The seller is selling, but there are probably some bittersweet feelings about it. They made some memories in that house and probably want it to go to someone who will appreciate it as much as they did. Suggest that your buyers write to the seller the day after getting the tour to tell them how much they loved the house and why you want to live there. You never know – scoring some brownie points like this might be enough to win a possible bidding war.
- Be accessible: The last thing your buyer would want is to miss a phone call from you looking to confirm your bid. Tell them to have their phone nearby (with the ringer on) and watch their email inbox. Losing a bidding war at the buzzer could be a costly loss.
*Not all borrowers will qualify. Contact us for more information on fees and terms. Not intended as legal, financial, or investment advice. Contact your financial representative for more information.
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Diana Olick. (2021, February 13). Bidding wars are off the charts, as home listings fall to a record low. Retrieved February 19, 2021, from https://www.cnbc.com/2021/02/12/bidding-wars-for-homes-are-off-the-charts-as-listings-fall-to-record-low.html
Diane Saatchi. (2018, December 19). How to survive (and even win) a bidding war. Retrieved February 19, 2021, from https://www.dianesaatchi.com/blog/2018/11/13/how-to-survive-and-even-win-a-bidding-war
Directo-Meston, D. (2017, July 13). Buying a house in la: How we survived the bidding wars. Retrieved February 19, 2021, from https://la.curbed.com/2017/7/13/15951074/buy-house-making-offer-tips
McDermott, M. (2020, November 29). Bidding wars and beyond: Tips for buying a home during the pandemic. Retrieved February 19, 2021, from https://www.newsday.com/business/coronavirus/homebuyers-pandemic-tips-pitfalls-1.50073938