For buyers, the current DC area real estate market can feel like an episode of the TV show The Great Race. Purchasers keep chasing one house after another, only to confront other people chasing the same houses. The reason is simple: a combination of low supply and low interest rates. The result: lots of buyers chasing few available houses. The result is fast sales, many with multiple offers. It’s not the kind of market that you, as a purchaser, wants.
The question is: How can you, a helpless house-hunter, compete in today’s crazy competitive world of real estate? First, take a deep breath. Then consider the following:
The #1 rule of househunting in this kind of market is: be prepared. And there’s something you can do before you ever get into a cometitive bidding situation: bring your price range down. If you operate in a lower price range than you can actually afford, you have the edge. You can escalate your offer price, without feeling like you are stressed beyond your limit.
Now, let’s say you get out there, find a house, and then learn that you are competing with other prospective buyers. Will your Realtor tell you what they are offering? The answer is NO. The listing agent’s job is to represent the seller and to protect the seller. Giving away any information about other offers is simply doing a disservice to the seller.
So, you are working blind. What can you do? The answer is: Assume the other offer is perfect and amazing in every way. The ask yourself what can you do to compete WITHOUT putting yourself at risk? Here are the things you CAN do:
1. Write an introductory letter about yourself, your family, your pets. Add photos.
2. Submit an escalation clause, along with your offer. This says that you will beat any offer at the table by a certain amount, up to a maximum that you are willing to pay. Escalation clauses work for both buyer and seller. For the seller, it means getting the top price for a property. For the buyer, it sets a cap, preventing the buyer from paying a price that he never intended to go to.
3. Drop the home inspection addendum contingency BUT keep the home inspection contingency–there is a difference. What you are saying here is that you want a home inspection but you will not ask the seller to repair anything. In other words, it’s a “take it or leave it” situation. If anything arises during the inspection that alarms you or that is too costly to remediate, you have the right to walk away from the contract without losing your earnest money.
4. Drop the appraisal contingency as long as you have money for cash above. This is a tricky one, but if you have the cash, you might want to consider it.
5. Ask for either a quick settlement or settlement at sellers discretion–check with your lender first to make sure he can meet the settlement deadline.
6. Offer a quick settlement with seller free rentback if necessary
Any/all of these suggestions will make yours a much stronger offer. But remember, don’t get discouraged if someone else gets the property you had your sights on. Properties come on every single day. Try to relax, keep moving forward, and keep all options open. You will find the house of your dreams, even in this nutty market!