How To Make A Winning Offer
Tips For Utah Home Buyers In A Sellers Market
If you thought a global pandemic would slow down the real estate market, you were wrong. Over the past few months, there has been a surge of activity with home buyers flooding the market but . . . low to no inventory.
2020 has been the “Year of the Seller” here in Utah.
In fact, Your Utah Realty agents were hosting an open house recently and ran into multiple buyers who had put down several offers. One buyer said they had made over 30 offers with no luck—THIRTY!! Another was making all cash offers and STILL had no luck.
So what’s a home buyer to do?
We’ve put together a list of tips to help you make a successful offer on a home, albeit with a very large disclaimer—simply following these tips is not a guarantee that you WILL win the next bid. But they’ll certainly help.
Hire The Right Utah RealtorⓇ
Of course, our number one tip is that you hire us!
And to do that is easy. Just call (801) 893-8880 and let us do the rest.
Having the right realtor is important. You need someone who is skilled in negotiation. Someone who is on your side, who is scrupulous and honest. And, you need someone who is willing to go the extra mile to help you find your dream home.
Now we could give you the usual song and dance that all real estate agents give, but you’ve heard it before. We want to give you a few things you may not know about us that really set us apart from the rest.
Here’s a few fun facts about our team:
1- We took the Masterclass The Art of Negotiation by FBI hostage negotiator Chris Voss and we’ve read his book, Never Split The Difference
2- We’re BOLD agents. We’ve taken extra training through Keller Williams to get out there and get ‘er done
4- Our agents will virtually tour homes for you and we’ll even do it live which is a huge plus if you’re out of state or you don’t want to tour homes during the COVID crisis
5- Plus, we have a wide network of resources we can refer to you for all things real estate, from moving companies to plumbers to mortgage lenders
6- You’ll be our neighbors. We have lived in Utah our entire life and we know this city inside and out. One of our agents was even the Guide for Salt Lake City for About.com and has written for the local papers!
Get Preapproved For A Mortgage
Having that piece of paper from your lender that says you’re pre-approved for a loan is like having a golden ticket to the Willy Wonka Factory. It means you’re in! Sellers know you’re qualified to buy their home so they’re more likely to take your offer seriously.
And did you know that many sellers won’t even show their home to you if you’re not pre-approved?
Learn more about how to get pre-approved for a loan.
Ditch The Contingencies
A seller will go with the buyer who doesn’t have contingencies as opposed to one who does. So if you’ve made a long list of demands in your offer, be prepared to have it declined or countered multiple times.
In a sellers market, it’s best to be a little more flexible where you can. Consider waiving contingencies, such as inspection contingencies, time constraints, or financing contingencies but use caution when doing so. We would never recommend our buyers purchase a home without an inspection, especially if they are buying an older home, so have your home inspection company on speed dial ready to hop and shorten the inspection period to sweeten the deal.
There are other ways to be flexible. For example, if you absolutely must have your first home sold before you purchase this one, see if your bank would be willing to give you a bridge loan.
What Is A Bridge Loan?
A bridge loan is a short-term loan that provides temporary financing during a transition period and is perfectly designed for buyers who are moving from one home to another. Monthly payments are generally interest-only.
Add An Escalation Clause
Sometimes real estate agents counsel their clients against using escalation clauses, but in a hot market it’s important to have an agent who understands how to include this clause and how to utilize it in a meaningful way.
What Is An Escalation Clause?
An escalation clause allows the buyer to tell the seller that if they receive another offer that they are willing to beat that offer by x amount up to a capped limit. Often the bid increases in increments. Some home sellers will not accept offers with escalation clauses.
Cash Is King
Are you able and willing to pay in cash? Or, if you really love the home, are you willing to pay above the asking price. In the home bidding wars, sometimes the bottom line is the only thing the seller is considering in their final decision. Even increasing the amount of your earnest money can make a difference when showing your seller that you’re serious about buying their home.
A buyer who can pay in cash without waiting for financing is generally preferred to one who must wait for a loan approval. And usually the highest offer wins . . . but not always.
Plead Your Case With A Buyer’s Letter
To write or not to write, that is the question when it comes to a buyer’s letter. Recently, our agents attended a short webinar about the do’s and don’ts of writing buyer’s letters.
A buyer’s letter helps the seller get to know the people who will be moving in their home. We all know how personal a home is and usually the sellers have fond memories and have put a great deal of love into their home. They want someone to move in who will love their home as much as they did.
However, there are various legal considerations when it comes to writing a buyers letter to avoid leading sellers to violate Fair Housing Rules. Any language or photos that reveal information about your demographics such as race, religion, or family style, should be excluded from your letter. Be aware that there are many templates on Etsy that would violate FHA rules.
What Does The Fair Housing Act Prohibit in Utah?
In part, the Utah Fair Housing Act prohibits discrimination based upon race, color, sex, religion, national origin, disability, source of income, familial status, sexual orientation, or gender identity. A single violation can result in a civil fine of up to $16,000 and multiple violations can get you fined up to $65,000.
So what can you say in a buyer’s letter?
You can flatter your seller and tell them how much you love their home.
You can emphasize your ability to pay for the home and get financing.
You can tell your seller you plan on living in the home and are not planning on flipping the home or using it as a rental. Avoid making statements about what remodeling plans you have for the home though, if you have them.
It’s not illegal to write and deliver a buyer’s love letter to a seller, but if the seller were to discriminate against another buyer based upon your letter, they could get into hot water.
Speaking of Buyer Love Letters, Don’t Fall In Love . . . Yet
When you’re at the point of making an offer on a home, you’ve already envisioned yourself living there. Perhaps you’re excited about the location and proximity to the local schools. Maybe you’ve picked out the new paint for the living room. But it’s important to remember that you may not win the offer.
One of the biggest regrets some buyers report is that they offered too much for a home they fell in love with. Sometimes our emotions can cloud our better judgment and turn into a bad financial investment.
It can also be demoralizing to lose offer after offer in a hot market and falling in love with a home just extends the heartbreak.
Before you begin searching for homes, it’s best to consult with a lender about how much home you can afford. Then, really analyze your budget and understand that homeownership often comes with extra hidden costs. The first time I bought a home, for example, I forgot I needed yard tools since I had always lived in condominiums before that – lawn mowers, hoses, and ladders are expensive!
When you find the home of your dreams, make sure it really fits into your budget. And be prepared to walk away if it doesn’t.
Hire Your Utah Realty
We thought our number one tip was the most important tip so we’re repeating ourselves here, and that’s to hire us to help you buy a home in Utah. Go ahead and contact us today! We’re the no pressure, no hassle agents that help you buy and sell your Utah homes your way.