I went house hunting last weekend. No, not for me. I tagged along with my daughter and her fiancé, who are moving from Texas to Colorado after she graduates from vet school (insert party hats and noisemakers here) next month.
Even for this seasoned house hunter, the experience was humbling. I have never seen so many over-priced, underwhelming houses sell for over asking price in the time it takes you to say new paint. Last weekend, we toured 12 houses. By Sunday night, all 12 had gone under contract, including the one the kids made an offer on and did not get.
Now here’s where I need to pause to deeply inhale smelling salts. On the one house they liked, the one that actually made their hearts beat a little fast, they made an all-cash offer for $15,000 over the asking price. The selling agent sent a text to our agent that literally said the offer “does not appeal.” She was expecting higher offers with a longer rent back — the seller wants to live in the house for five months free after it closes. The house sold for $100,000 over asking. You think I’m kidding. I wish I were.
So it goes in the bruising world of home buying. You set out with a wish list and keep lowering your bar. In this case, the kids want a decent kitchen with a counter to accommodate barstools, an under 20-minute commute to the vet clinic where my daughter will be working, a fenced yard, a little curb appeal, a little charm, a walkable neighborhood. And though they are willing to make some improvements, they don’t want to add a home remodel on top of two new jobs and a new marriage in a new state.
Yet as we toured homes for sale, the word that kept coming to mind was a word I loathe: settle. Well, if we replace the dated light fixtures, the worn stained carpet and the circa 1970 laminate counters, then maybe we could overlook the fact that the house backs up to the interstate, and the dark basement smells like wet dirt.
If you are in the market for a new house, here are some daunting words of advice from seasoned real estate agents to help buyers prevail in a sellers’ market.
Don’t expect a deal. Do not expect to purchase the home for well under the asking price or for the buyer to cut the price to allow for needed repairs.
Make your best offer first. You may not get a chance to negotiate. The stories of multiple offers in 24 hours are real.
Come with proof of funding. If you can swing all cash, do it. Next best? Bring as much cash to the table as possible and have a preapproval letter from a mortgage lender.
Shop for homes a little under your budget. This not only allows room to offer over asking, but leaves some funds for improvements, which you’ll probably need to make.
Get a great agent. When making an investment this important, you want to work with someone who is knowledgeable about the neighborhoods you’re looking in, has good relationships with other agents, gets tips on houses about to come on the market, is a creative negotiator and can act quickly in your best interest.
Steel yourself. Keep a level head when making offers and negotiating to avoid making a bad financial decision out of desperation and emotion.
Remove contingencies. The more contingencies buyers build into their offers, the more likely sellers will reject them. After securing financing, the next big hurdles are passing a home inspection and getting an appraisal. Though a home inspection is important for buyers, in some markets, buyers are willing to tell sellers they will waive all but the most significant issues. Appraisal prices typically lag behind market prices, so if houses are selling at historic highs, some homes won’t appraise for the selling price, which means the loan may not go through. If buyers can show they have the cash on hand to close the gap between the appraisal and the contracted purchase price, that’s a plus.
Offer more than money. Find out what in addition to price matters to sellers. Maybe they want a quick closing, a flexible moving date or a rentback period. Some nostalgic sellers favor buyers who promise to appreciate their homes as much as they have, whether for its historic architectural heritage or the avocado orchard and tire swing out back. Buyers who let sellers know that they share the owner’s love for the home may come out ahead.
Marni Jameson is the author of six home and lifestyle books, including “Downsizing the Family Home – What to Save, What to Let Go.” Reach her at www.marnijameson.com.