Do these stories sound familiar in our current real estate market?
SCENARIO 1: A home hits the market. Buyers arrange to see it with their realtor on the first day it hits. Buyer thinks it is absolutely perfect. Buyer waits on an offer until later that night still undecided about the terms of the offer and afraid to make a commitment. Buyer finally decides to place a strong offer and works with their realtor to give to the listing agent. Realtor gets a notification that the house is already under contract.
SCENARIO 2: A home hits the market. Buyer can’t see it for a few days. Buyer arranges a showing with their realtor for two days from now. Realtor calls buyer the day before to cancel the showing because the home is under contract.
SCENARIO 3: Buyer LOVES a home they just saw with their realtor. It’s perfect. They work with their realtor to get an offer in quickly. The listing agent calls for best and final offers by 8 PM that day. However, they refuse to go over list price and offers a small due diligence. The realtor informs them that the seller accepted another offer well above list price. Buyer tells the realtor that they would have been willing to go much higher as well but now it’s too late.
UPDATE SCENARIO 4: ALERT! We have entered “sight unseen” world. Buyer loves a house. Buyer is confident and ready to submit a huge offer WAY above list price, with a huge due diligence (non-refundable) deposit, and is scheduled to be the very first showing of the home. Buyer gets a text from their realtor saying their showing was cancelled and the home was sold to a “sight unseen” buyer.
If you live in the Triangle area, these are the scenarios that buyers come up against time and time again. You can bet if a decent house hits the market, it will be under contract within days if not hours. If you actually are able to place an offer before a house is under contract, it’s likely you will lose out to one of multiple offers that are frequently well above list price or you can’t even get the chance to make an offer because the house sells too quickly. And now, you might not even be able to schedule a showing or your showing will be cancelled because MANY houses are sold “sight unseen” to another buyer.
So how do you win in these IMPOSSIBLE scenarios? I can speak from experience having helped my buyers consistently win in multiple offer situations or better yet, been able to secure the home before other offers come in. So how do we do it?
Strike First. Strike Hard. No Mercy.
OK yes, my family just finished Cobra Kai on Netflix so perhaps I’m exaggerating a bit (especially the “no mercy” part). But there really isn’t a better way to describe the way to get a house under contract in a white hot real estate market. This is part one, “Strike First”.
For swimmers and short-distance runners, getting a fast start may be the difference between winning and losing. This is especially true in a hot real estate market. I cannot emphasize enough the importance of getting to homes and getting offers in as early as possible. Here are the crucial steps to making sure you “Strike First”:
1. Have your realtor set up real-time alerts for homes that meet your criteria.
Make sure you have alerts set-up to immediately inform you when a house that meets your criteria goes on the market. This does NOT mean using Zillow alerts. I can set my clients up with instant real-time alerts directly from TMLS, the multiple listing service for all listings in the Triangle, so that they get instant alerts. Zillow, Trulia, Realtor, etc. work off broker feeds which can take up to a day or more to update.
2. If you see a home of interest, see it as SOON as possible.
Once you find a home that may work for you, make sure you do whatever you can to see it ASAP, preferably the same day. Every second the house is on the market before you see it increases the chance it will go under contract, possibly even before you see it. I get the same alerts my clients get so frequently, I am the one who contacts them to see if they want to go see the home. Realtors need to be relentless in making sure they familiarize themselves with what their clients are looking for and contacting them proactively if something interesting hits.
3. Plan ahead of time and make sure you have a pre-approval from a lender
So this really is in preparation for number four on this list but time is of the essence and every minute we can save by planning before seeing a home is crucial. If there is time, your realtor should already have crunched the numbers (in my case, I will have already ran the numbers and done exhaustive research) to give you an idea of what the home COULD sell for. This is not an appraisal value (which should be considered when finalizing an offer but I’ll discuss that in my next post) but rather, taking current market conditions, previous comps, and other factors to determine a probable selling price which again changes depending on the number of offers on the table and time on market.
You should have an idea on how high you COULD be willing to go, depending on the actual showing of course, as well as ideas on how much risk you are willing to take on via a due diligence and earnest money deposit. As I’ll discuss in my next post, these deposits sometimes are as important or more important to sellers than even price. You also should know your time frame for closing and to do inspections.
Finally, I should have started with this, but it is IMPERATIVE to have already spoken to a reputable lender and received a pre-qualification or pre-approval and have determined your maximum price point. Keep in mind, HOAs, taxes, and home insurance will differ from home to home so maximum price may be different depending on the resulting monthly payment.
4. If you want the home, get your OFFER in as soon as possible.
Once you see the home and you want to make an offer on it. It is absolutely imperative to get your offer in as QUICKLY as possible. There are two reasons for that. First, you may beat other offers to the table and if you are first, it is your realtor’s job to do what it takes to try to get the home off the market and under contract for you before that happens. Second, if the seller insists on waiting for other offers or there are other offers on the table, you may have less competition if you are first because you can try to accelerate the seller’s decision making process – your realtor is ultra important in this phase of negotiations. As Ricky Bobby’s dad said in Talladega Nights, “if you’re not first, you’re last.” Ok, that makes very little sense in most cases but in real estate, there is truth to it.
So that’s it for part one of how to get a home under contract in an impossible market. In my next post, I will discuss the importance of “striking hard” in multiple offer situations. Thanks for indulging my Cobra Kai references and I promise, no realtors were harmed in the making of this blog post. Until next time…
Please leave comments and feedback below. If you have ANY questions about this topic or anything else please don’t hesitate to contact me at [email protected] or text/call me at (919) 559-3729.