Key Highlights

  • Hot seller’s market happening now with historically low inventory and bidding wars ubiquitous
  • Price pressures no longer limited to a few cities…price pressures are everywhere.
  • Redfin believes this seller’s market to last at least through first half of 2020.

Lexi Klinkenberg, a marketing manager with the online brokerage firm Redfin, put together a list of “Best Tactics” for buyers to win the house they want and can afford in this sizzling hot seller’s market.

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Feel free to pass along this list to your clients so they are prepared to ACT NOW…with your help, of course.

  1. Be sure to be pre-approved for a home loan.
    1. A pre-approval letter from a lender tells any seller that you as a buyer are highly motivated.
    2. A pre-approval letter from a lender also tells you the agent and you as the buyer the amount of mortgage you as the buyer have been approved for.
    3. A pre-approval letter indicates to all parties involve that you as the buyer are not wasting anyone’s time.
    4. It usually takes 24 hours, give or take, to get an underwritten pre-approval letter from a lender.
  2. It goes without saying that motivated buyers need a motivated, knowledgeable real estate agent.
    1. A great agent makes everything move more quickly, more smoothly and with less stress.
    2. A great agent is one with the right experience, information and knowledge to best represent you at the negotiating table to close your best deal.
    3. A great agent provides market insights and specific neighborhood knowledge about comparable pricing, schools, walkability, amenities, etc.
  3. Make what you and your agent believe is your best offer.
    1. If you can make a cash offer, do it.
      1. No having to wait for financing contingencies.
      2. No having to wait on anything or anyone.
    2. Write a letter that is specifically crafted to each seller and each house.
      1. This is a common tactic in a hot market and a competitive neighborhood.
      2. Tell the seller specifically why you want to buy their home.
        1. Tell the seller what you love about their home – people like to be flattered
        2. When looking at the home, look for commonalities you might have with the seller such as kids, dogs, lifestyles, aesthetics, appreciated functionalities, etc.
      3. If you can put down more earnest money, do it.
        1. This is a concrete action that tells the seller how much you want their home.
        2. More earnest money than the norm indicates your seriousness and gives you a leg up in a competitive market/neighborhood.
  • If there is a problem with something related to the home inspection or home appraisal, you will get back the earnest money.
  1. Make sure you add an escalation clause.
    1. Adding an escalation clause expresses your intention to the seller that you want the opportunity to be the high bidder in a bidding war.
    2. An escalation clause tells the seller you are willing to increase your offer, usually by some predetermined amount you’ve worked out with your agent.
  2. Do not have extra contingencies EXCEPT for the home inspection contingency.
  1. Give the sellers a move-out timeline that is convenient for them, if at all possible.
    1. The process of buying and selling a house is equally stressful to buyers and sellers…no need to add additional stress onto the seller with an inflexible move-out timeline if you can help it.
    2. Your flexibility may give you as a buyer the competitive leg-up you need to “win” the house.
  2. Be willing to make concessions during contract negotiations.
    1. Comprising on who is going to paint the kitchen or redo the deck may enable you to “win” and move into your new house more quickly.
    2. Great real estate agents are great negotiators. Make sure you and you agent are on the same page and allow your agent to negotiate your best deal.

 

Thanks to Redfin’s Lexi Klinkenberg.

Also read: Podcast: The Truth (vs Lies) About Rich People, Podcast: How To Sell The Unsellable Listing, Podcast: 14 Rules For Financial Peace | How To Build Real Wealth, Now.

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