BY ERIK J. MARTIN, CTW FEATURES
If your New Year’s resolution is to buy a home in 2022, you’ve got a lot of wind at your back thanks to continued low-interest rates. The problem is, a lot of other folks have the same idea in mind, which means you’ll likely face stiff competition in your hunt for the ideal home that fits your needs and budget.
Put another way, brace yourself for a bidding war.
“In much of the country, due to the ongoing pandemic, the housing inventory is extremely low” explains Jason Lefkowitz, a New Jersey-based attorney and real estate broker salesperson with Keller Williams Realty West Monmouth. “In addition, many people are looking to flee the city either because they realize they’ll be working in a remote capacity anyway or would like more space and distance away from populated areas where the risk of getting sick is higher. As a result, there has been a mass exodus from many metropolitan areas. Consequently, the demand is far exceeding the supply, thus driving up prices.”
Chances are, a sweet property you spot is likely going to receive multiple offers. So how can you rise to the top of the heap? By following best practices and working closely with your real estate agent, say the experts.
“There are many smart strategies to pursue when you have rivals competing for the same home,” says Emily Attwood, a real estate agent with Washington, DC headquartered RLAH Real Estate. “First have your agent call the home’s listing agent to learn what the seller is looking for in an offer. This will help you determine which contingencies to remove and which to keep. The seller will almost always take an offer with fewer contingencies.”
Michelle Goetzinger, a Realtor with Pittsburgh-based Berkshire Hathaway HomeServices, advises her clients to make their best offer upfront.
“For starters, this involves choosing a traditional loan over FHA loan which has more restrictions and may turn off the seller,” she says. “Secondly, include an escalation clause that automatically increases your bid up to a certain amount. And their, reduce the number of contingencies in your offer.”
Most pros strongly recommend having a home inspection conducted to determine any hidden flaws in the home you are eyeing. But you can opt to waive your home inspection contingency, which means you can have the inspection done, but you can’t back out of the deal – or get your deposit back – if you find an issue. Waiving this can make your offer look more impressive to the seller.
“Offer to take the house as-is. Tell the seller you will not renegotiate after the home inspection is completed and that, if you decide to take the house, you can make any necessary repairs yourself later,” suggests Andrew Ragusa, CEO/broker of REMI Realty in Long Island, New York. Additionally, consider guaranteeing a particular amount above the appraisal value.
“Sometimes telling the seller, ‘I will guarantee you X amount over the appraisal value’ will get you the deal. For instance, if the appraiser says the home is only worth $480,000, you can guarantee the seller that you will pay $500,000.”
Brittany Hovsepian, the owner of The Expert Home Buyers, also suggests increasing your hard money.
“Raise the down payment amount you are willing to put down,” says Hovsepian. “Alternatively, offer to pay the seller’s closing costs and to make your contingency dates more flexible for their schedule.”
Lefkowitz says sincerity and kindness can go a long way, too.
“Try standing out from the crowd by sending a personalized letter to the seller. I have my clients talk about their own family, their appreciation for how much the owners of the home have done, and how they can see themselves in the home,” he says. “And always aim for genuineness in your approach. That means don’t come in and haggle if it’s a really nice property with a multitude of showings on day one. If you come in with a higher offer than your competitors right off the bat, many times, your offer will be selected because the seller will recognize your earnestness.”
Have an exit strategy in mind, especially if you want to avoid getting in over your head.
“Remember that engaging in a bidding war isn’t worth it if the asking price was already going to stretch you thin on your monthly budget,” adds Hovsepian. “Be sure you have a substantial enough financial cushion so you can afford to make higher bids.”
Want to sidestep a potential bidding war? You may need to broaden your horizons.
“Look at more houses in a wider variety of areas, consider getting a fixer-upper, or ponder purchasing a home that is perfect and slightly more than you wanted to spend,” advises Goetzinger.