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Multiple
offers. Bidding wars. One-day sales. “Sold Out” signs on developments
under construction. As little as five years ago, these events would have
been rare in Virginia’s real estate market. But in the last couple of
years, they’re commonplace in many neighborhoods—all because we’re in a
Seller’s Market What’s a Seller’s Market? A robust economy has resulted in
more buyers in the market looking to purchase homes. Mortgage monies are
more readily available and interest rates are near a 30 year low. Renters
are turning into homeowners. One bedroom condo owners are moving up to
larger properties. And even as many underutilized properties are being
converted into housing, property demand continues to outpace the supply.
Since
buyers are at a disadvantage, what can they do to be successful in getting
an offer accepted on a property? The best advice is use a Realtor that
will represent them as a buyers agent. A buyer’s agent will represent the
buyer, help them find the right property and negotiate the contract on
their behalf. Buyers should also:
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Get
connected and be available. Since a buyer may need to act on a
moment’s notice, it is imperative to be easily reachable. Cellular
phones, fax machines and e-mail make it possible to present an offer
quickly.
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Being
pre-approved for a mortgage gives a buyer an edge over someone who is
merely pre-qualified. A seller has less risk accepting the offer from
the buyer who is pre-approved. Also, a pre-approved buyer is more
realistic about what properties they can afford.
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Be
adaptable on items that can increase chances of having a bid accepted
by the seller. Closing & move-in dates, fixtures, appliances and
personal property, are all contract issues that can influence which
offer a seller approves.
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Help
the agent be creative in structuring the negotiations! A buyer may
possess a product or service that a seller desires. If a buyer owns a
vacation home, they may want to offer a free week stay as an incentive
to accepting an offer. Accountants can offer to do their taxes.
Transaction are not just about price, they are about terms specified.
It is
important to be careful about negotiating away clauses that protect the
buyer, such as home inspection contingencies, attorney approval, etc.
A buyer
can be prepared by having their Realtor do a Comparative Market Analysis
for the types of property being sought in order to be aware of trends
and twists of the market in their property price range.
Be
careful when bidding over the listing price. The bank’s appraisal may
not meet the appraised price, or a buyer may not be able to recoup their
investment when they decide to sell. However, in a hot market, there are
properties which will sell (and appraise) for over the amount of the
listing price—especially when multi offers are involved.
Finally, be optimistic.. Buyers shouldn’t take it personally if their
offer isn’t accepted. The Buyer’s agent will continue to carefully
search for another property that meets the buyer’s specifications. It is
not unusual for Buyers to submit offers on a few properties before they
finally succeed.
Even in a
Seller’s market, it still a wise investment to purchase a home. Property
is reasonably affordable in Virginia and current interest rates allow for
more “buying” power.
A Buyer’s
Market is more typical in tighter economic times. Although a buyer may
have more inventory and a better bargaining position, it also means higher
interest rates, larger mortgage payments and reduced buying power. Know
the market and use it to your best advantage.
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