Published April 2021
You’ve probably heard by now that our Delta County real estate market continues to attract plenty of prospective buyers but is lacking in inventory of properties to meet the demand. It’s become the classic “Seller’s Market” – a term commonly used when low supply meets high demand and results in pricing power for the seller.
Is this a good time to buy? We think the best time to buy is when you are ready, no matter what
type of market exists. Here are a few tips that might help you become successful in a seller’s market:
- Make your best offer. This is probably not the time to worry about “getting the best deal”, it’s more about “getting the home or property that you want”. Forget negotiating and go in with your best price. Don’t overanalyze the asking price. Be prepared to make a decision and move quickly.
- Have your financing in order. If you’re not a cash buyer, sellers will be concerned about your ability to close the deal via a mortgage or bank loan. Start your conversation with a lender before starting your home search. Don’t just get pre-qualified, which means you told the lender your story and they gave a written opinion. Get pre-approved, which means you‘ve made a loan application with verifying documents and the lender produces a written approval subject to you getting a contract and a successful appraisal.
- Be prepared for a bidding war. Don’t be afraid to be aggressive. Multiple offers are more common in this type of market. Especially if it’s a new listing, you should expect and be prepared for competing offers. Now’s not the time to try to strike a bargain, but rather give it your best shot. And think about other ways to make your offer more competitive. Sellers will often choose a lower offer if it looks more likely to close. Many buyer contingencies (loan approval, appraisal, inspection, insurability, survey) are very low risk. If you’re willing to take on that risk, you can eliminate the contingency and make your offer more attractive, even if it’s for less money. Or, since our contract wording for loan contingencies effectively gives the buyer the right to terminate the contract for any dissatisfaction with any feature of the loan, even if it’s approved, you could add wording that you won’t terminate if the loan you’ve applied for is approved.
- Consider offering more earnest money. The earnest money counts toward your down payment and will be at risk only if you change your mind about buying after your contingencies are all met. Since this is not likely to happen, it’s usually a safe risk to offer more earnest money to help make your offer stand out in relation to others.
- Offer the seller a leaseback. It could be for 1 or more months at a reasonable rental rate if your situation is such that you don’t need to occupy the home immediately. For some sellers, the convenience of staying in the home they just sold while searching for their replacement home or waiting for it to close or be built can be worth thousands of dollars.
- Consider an “Escalation Clause”. This is a clause, usually inserted into the Additional Provisions section of the contract, whereby the buyer agrees to increase their offering price by a set amount over and above any other written offer the seller receives. This enables the buyer to try the lower offer, while agreeing to increase to a higher price over any other written offer that may come in. This should never be done unless you put a “cap” on how high you are willing to go. Of course, this also has the effect of possibly revealing to the seller how high you might be willing to go, should the seller simply counter your offer.
- Use an experienced agent! Working with a skilled and knowledgeable agent who understands the subtleties and intricacies of the process will help you navigate this process and will increase your chances of gettng the home you want!