Business & Finance Renting & Real Estate

Getting Your Purchase Offer Accepted in This Fast Paced Market

New buyers to the Real Estate market might be feeling a draft when getting into the home purchase game.
The reality of the market is that we went through a very brief buyers market and jumped head first into another sellers market.
Mainly because of the aggressive price cuts the REO or banks owned homes have had.
The drastic 40% to 46% price drop from 12 to 15 months ago is due to the fact that the market was suddenly holding many bank homes that weren't moving.
Now with the $8,000 bonus for first time buyers and the prices being 40% to 50% less the market is a free for all.
Aggressive buyers have come into the market with iron wills to get a home.
It seems that all those on the fence from a year or two ago have all decided to jump in at the same time.
Hence, our long awaited buyers market quickly ended.
For that reason it's now common for us to see strong competition on REO homes and let's face it.
The regular Joe trying to sell his or her home right now is not going to move unless he absolutely has to.
Competing with bank owned homes is difficult, when they are under pricing the properties fifty to seventy thousand.
Heck we feel its low enough at market value; to lower it an extra fifty thousand just creates an extra large knot in their stomach.
Getting your offer accepted has its tricks to it.
Most sellers, asset management companies you'll be dealing with are going to push you and your fellow buyer competition is going to push you even further.
With more and more buyers coming into the market and the inventory being as short as it is.
You can expect this to continue for the next few months.
So getting your offer accepted is going to take some tactful negotiating and luck, lots of it.
First, you're going to have to write an aggressive offer.
If you think lowball offers are going to work.
Stop right now.
Think about your best offer and then add to it.
The idea is to stand out from the other 10 or 20 offers on the table.
Not to the point where it's ridiculous, for example offering 450,000 for a home you well know is in the 380,000 price range.
What I'm talking about is going to market value, when the property is underpriced by the bank and adding an extra 10 to 15 thousand to your price.
Now before you shoot listen up.
The idea here is to negotiate the price when the appraisal has issues, which you know it will, with national companies doing appraisals now.
Just be very careful to not remove contingencies for appraisal or loan before you confirm it's either worth the price you're paying or get a chance to renegotiate the price.
Also, be ready to walk away form the home if the seller is not willing to reduce the price to appraised value.
This is about the only thing you can do in this real estate climate to get your offer accepted.
Either this or cash, you tell me which is easier.
Again, don't get into a contract that asks you to remove appraisal within 7 days or go without it all together.
That's asking for trouble you can and possibly will lose you're purchase contract deposit.
Also, be sure to READ the addendum that those tricky asset Management Companies are going to reply to your offer with.
Second, be especially careful with your deposit when an offer is accepted.
Again, be sure to read how you're deposit is going to be applied as liquidated damages if you do breach the contract.
The contract we use here in Orange County CA is structured to give the seller a maximum of 3% of the purchase price to the seller as damages if you breach.
I have seen asset managers ask for the total sum of deposit, initial deposit and increased deposit if any.
With one client they wanted to keep 15,000 as damages when the max per the contract would have been about 6,000.
That is just greed if you ask me.
The fairest seller I've seen out on the market has been Freddie Mac.
Regardless of your deposit amount, it you breach they keep only one thousand of your deposit.
That to me is fair.
Third, don't ask for everything on your contract, meaning termite, home warranty, closing cost, repairs, etc.
The cleaner your offer the better, just be sure to get a good inspector to look the house over for you and remember just because you don't ask the seller to pay for termite, doesn't mean you don't have the right to investigate the termite condition of the house.
What can I say? Happy hunting and best of luck on your purchase! May the hunt make your new home that much more enjoyable!

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