Real Estate Round-Up: Buyers, write your best offer

Being a buyer in this low inventory marketplace can be frustrating to say the least. Unless you are a buyer shopping above the $1,500,000 price range, you will be competing against many other hopeful buyers who want the same home as you.

Homes that are priced correctly, are sold within a few days, often for over the list price. Currently we have less than a half month's supply of homes under $1,000,000. Over $1,000,000, we only have a three months' supply. There are only 64 detached homes for sale in all price ranges. Historically, our normal is between 400 and 450.

The current situation is like looking for a pair of red shoes and finding that there’s only one pair available. That pair will be sold to the highest bidder in a matter of seconds. Welcome to “buying a home, 2021.”

So, what’s a buyer to do to “win” the prize? Here’s a few helpful tips:

First, hire an experienced Realtor who understands all the documents you will need to execute so your offer is complete. I’m not self-promoting here, but rather pointing out what should be the obvious first step. You can have the best of intentions, but if it is not executed correctly and completely, the message will be lost in the delivery.

I bristle when I receive offers that are incomplete. I have received offers where the Realtor drafting the documents doesn’t acknowledge the agency relationships that exist or doesn’t complete the names of the sellers.

When buyers use a Realtor out of the area, they often forget to ask for a septic inspection, which is a key component to the negotiation of an offer. Missing or incomplete documents do not make a strong first impression, so if you are competing to “win” a property, I wouldn’t want to start out this way.

Second, write a strong offer. What is that? Knowing that there is less than a half month's supply of homes for sale under $1,000,000 means that a strong offer will be at the list price, and possibly over the list price. The offer should have a solid earnest money deposit, which is generally between 1% and 3% of the purchase price.

Have your Realtor find out in advance what kind of close of escrow date the sellers would prefer and write that date. Let the sellers choose escrow, title, and any other service providers. Provide a lender approval letter and proof of funds when you submit your offer.

Then there are subtle details that can set your offer apart. Shorten up the days you have to perform your inspections and remove that contingency. The boiler plate is 17 days; make it seven. Shorten up the loan approval date. The boiler plate is 17 days for the appraisal and 21 days for loan approval.

If you’re approved before you write your offer, then the only thing the lender needs to do is order the appraisal which can be done well before the 17 days. Once you have performed all the buyer's obligations, you can remove your contingencies. The sellers can then be confident that your escrow will close.

Imagine how much stronger your offer is if you can remove all your contingencies in 10 days, compared to a competing buyer who sticks with the boiler plate timelines?

Occupancy is another way to make your offer stronger than your competition. Give the seller extra time to vacate their home. Give it to them at no cost. Sounds crazy but think about the value to the seller of knowing they don’t have to move out the day you close escrow, but rather have extra time to vacate. It’s not only a peace-making tool, but it also saves the seller some money too. That simple tool makes your offer not only friendlier but financially better for the seller.

A word to the many buyers who must sell their current home first, so they can qualify to purchase their new home. Sell it. Get it in escrow and make sure that your Listing Broker protects you from being homeless.

An experienced Realtor knows the document to use to protect you on this. Shorten up your buyers timelines, so their contingencies are satisfied. Experienced Realtors also know how to get you additional moving time. If you can negotiate a long rent back on the home you’re selling, get that extended occupancy and close escrow, sooner rather than later.

It all gets down to risk and reward. The less a seller has to risk, the more the seller can profit, and the more streamlined the process, all contribute to your chances of “winning” your new home.

If you need help navigating this labyrinth of a process, contact Murphy and Murphy to help you strategize so you can “win” the prize. It’s a great time to buy!

Kim Murphy can be reached at [email protected] or 760-415-9292 or at 130 N Main Avenue, in Fallbrook. Her broker license is #01229921, and she is on the board of directors for the California Association of Realtors.