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By Emilio DiSpirito, Real Estate Advisor/License Partner of Engel & Völkers Rhode Island
As we talked about in our overview of the luxury real estate market, right now is a great time to sell a home. However, the reason for this seller’s market is a lack of inventory and increase in demand, making the current market highly competitive.
Despite this level of competition, you may still desire to buy a home as jobs transition remotely and you have less reason to live near a major city. Therefore, we’ve compiled some helpful tips to secure your dream home in even the most difficult of markets for buyers.
Getting pre-approved for a loan sets you apart from other buyers, as it immediately allows the seller to have confidence in the fact that you are financially stable enough to purchase their home. A pre-approval is essentially a letter from a loan officer validating that you have enough money to buy the houses you are looking at. To get pre-approved, you will need to provide your loan officer with income statements like W2s or 1099s, credit statements, and any information about debt you are or were in.
It is important to note that being pre-approved is not the same thing as being pre-qualified, as pre-qualification is based solely upon information that the buyer provides, whereas the pre-approval comes after the loan officer verifies all of the information is correct.
Know What You’re Looking For
In a hot market, you won’t have time to tour a house, take a couple days to think, and then come back and make an offer. If you’re interested in the property, you will need to make an offer, and quickly.
That’s why it is imperative to have a predetermined list of wants and needs before you start touring houses. For example, you may need 2 bedrooms to sleep everyone comfortably, but it may simply be nice to have heated floor tiles in the bathroom. Knowing your priorities will help you understand exactly the types of properties you are interested in touring, and how much money you’re willing to offer for different amenities.
Secure a Hyper-Local Team
Creating a team of people you can trust, and that will be with you throughout the entirety of the process, is a valuable tool in making you stand out as a buyer.
First, look to utilize a local loan officer from the area in which you’re looking to buy the home. These loan officers have likely been around for a while, so the selling agents will recognize their name on the pre-approval letter and understand that you are putting in a reputable offer.
Additionally, secure a real estate agent you trust, and that knows the local market thoroughly. You can find these agents through friends and family recommendations, banks, or search queries. While this last option can be fruitful, you are likely to find your best agents through recommendations, as others you trust can verify that this real estate agent will help you to secure the house you want. Banks can be a helpful tool because they can provide you with a real estate agent and then communicate with said agent about your financial possibilities, ultimately allowing you to be practical about the types of homes you’re looking at.
Even with family, friend, and bank recommendations for agents, it is still best to interview at least 3 agents before deciding to move forward. You are likely to spend a large amount of time with this agent, and you will be dealing with a stressful and complicated transaction, so it is best to work with someone you connect with and can trust.
Having a great agent will help you in a variety of ways. Namely, these agents can show you new listings as soon as they’re put on the market, help you negotiate the price with the sellers, and have a good idea of what the local market looks like, which will help you offer the proper price for a home. Lastly, a good real estate agent will speak with the listing agent to get a full idea of the sellers’ desires, allowing you to make the most complete and acceptable offer possible.
Set Yourself Apart from Other Buyers
With the market being so hot right now, nearly any house you put an offer on will have at least one competing offer. While it can be uneasy to go up against other buyers, you can win these battles without breaking the bank.
A common, and often effective, move is to offer cash. Offering cash makes the transaction far easier for the seller and shows them that you already have the money to purchase the house. This way, they don’t have to risk anything going wrong with the buyer’s loan and can circumvent the hassle of contingency offers.
Keep Your Offer Simple and Competitive
Cutting down on contingencies in your offer will make it attractive to sellers. Sellers want to have as few contingencies as possible because contingencies are potential reasons the transaction could get hung up. You can consider removing all contingencies, but this is a risky move. For example, if you remove all contingencies, including an inspection contingency, you may find yourself moving into a house that needs thousands of dollars in unforeseen repairs.
To compete with cash offers, make your offer at or above the listing price. Because paying in cash makes the transaction much easier and is a much more attractive offer to the seller, people who make offers in cash typically do so at below market/listed value, so beating that amount of money with your offer is a great way to compete.
Make a Complete Offer
Sellers will have a list of things they would like met within a given offer. Paying attention to, and meeting all of these requirements will go a long way in keeping your offer out of the trash. Details are key here. Make sure you have all the paperwork ready when you make your offer.
Write a Letter to the Seller
Often, sellers are not merely selling a house as an investment or to make some quick money. Selling a house one has lived in for several years is an emotionally stressful situation. Writing a letter to the seller to show your good faith can go a long way. Keep it short, personal, and pointed. Let them know why you would make a welcome addition to the neighborhood, and how you would uphold the level of respect they have for the house you’re trying to buy.
Close as the Seller Prefers
Sellers will have preferences for how they’d like the closing of the deal to go. Some will need to move quickly if they have a new job starting up in a different state, while others may need to finish out their current contract before moving. Keeping the seller’s preferences in mind and being as accommodating as possible will be helpful in convincing them to sell you their house.
Buying a home in a competitive market can be an intimidating and emotional process, but if you approach it as just that – a process – you are likely to yield positive results. Doing your research and having everything you need in line will always be the best first steps to take, as well as finding a suitable real estate agent and loan officer.
For help finding the best real estate agents around, reach out to The DiSpirito Team!
If you would have asked me what I wanted to be growing up, little Emilio would have told you “an archeologist” or “an architect” despite the fact that at age 8 I had my first lemonade stand, landscaping business and was recording my first “news show” on my boombox! Well, I never was much good at trigonometry and did could not see myself traveling for months and possibly years at a time, so becoming an architect or archaeologist clearly did not happen!
Fast forward 26 years later and I’m running a team of the finest residential real estate professionals, own a media company and host my very own radio news show about real estate!
For 7 years straight it seemed that I had put in more hours than the day had to give on my real estate business. 7 days a week, 14 to 16 hour days, without a break! Why? My friends and family did not understand the sheer magnitude of moving parts and services we offer to our clients during a transaction! One slip up or one missed call could mean make or break for someone’s dream home or even a lost deposit!
Running a team of like-minded, highly qualified and capable professionals has allowed me to offer a very streamlined, simplified and efficient approach to the sales process for our clients and allowed me to earn personal time again with my family while not missing a beat for my clients!
When I’m not working, I’m with my family, riding my mountain bike, eating at a number of local restaurants, enjoying live entertainment, hiking, skiing or reading!