The single most important thing you can do to score a good deal, even when submitting offers in a market favorable for sellers is this: Be Active. There are a couple different aspects to this concept, but, once you’ve decided to buy a home, you need to be ready and you need to be willing to put in the time, whether that’s submitting documents to your mortgage broker, looking at houses the day they become available, or taking the time to get your offer submitted, even if you’re busy with work, family and other obligations.
Part of being active begins with having your financial house in order, i.e., have your loan ready to go by submitting the necessary financial documentation to your mortgage broker and have them run it through underwriting. By doing this, there shouldn’t be any hiccups during the loan process, which is attractive to any seller considering an offer from you because it shows your commitment to the property and the process. By taking care of this step prior to submitting an offer, you can also tighten the time period you’ll need to get your loan to go through. This timing can be the difference between your offer and another offer so make sure you’re on the positive side of that equation.
Being active also means staying on top of the market. Your agent (hopefully me) should have his eyes and ears open for possible off market listings as well as listings that are coming up in the near future. A little advanced knowledge can mean the difference. Realistically, however, you’re going to buy a home that is on the Multiple Listing Service (MLS) because the overwhelming majority of sellers utilize the active market exposure to reach the most buyers and obtain the most money for their home. Wouldn’t you?
A common misconception the public has is that the only way to get a good deal is by buying bank owned properties, which are basically nonexistent in today’s market. Out of the 2,148 houses that have sold in Marin County year-to-date, 13 of them were bank owned. That’s .6% percent of the market. Oh, and those 13 REO’s that did sell this year were sold for market value. Do you really want to continue to focus on REO’s?
We then have the other public misconception, and that’s the secret house for sale that sells for some ridiculous price well below market value. The truth is that, on the rare occasion those off-market sales for low prices do happen, there is ALWAYS a reason. If you looked at the details of the transaction and the property, you would find out that the property had some major flaws that are not apparent on the surface and the buyer had to buy the house with cash, and they’re going to have to put a ton of cash into it just to get back to even, so, unless you have $500,000, $700,000 or even a million+ in cash laying around, that property was not an option for you. And, you’re not a contractor, have never even remodeled a bathroom, let alone an entire house, and you have a full time job and two kids. You could never have bought that house. Is that a little harsh? Maybe, but the faster you are able to deal with reality on reality’s terms, the better off you’ll be. There’s no sense in wasting time waiting for something that doesn’t exist, so it’s better to get to work as soon as possible.
The bottom line is that we’ll keep all options open, including REO’s and off-market opportunities, but, realistically, you’re going to buy a house that’s on the MLS and other buyers just like you are going to know about it. Being proactive can increase your chances and staying on top of the market could pay off. This means, if you’re actively looking to buy a house, your agent should be watching the market all day every day, including weekends. If something comes on that’s available, go see it right away, even the first day it’s on the market. If you like it and want it, submit an offer immediately. Depending on the situation, a seller may set an offer date, in which case you might want to wait to get a sense of the competition, but this scenario will have to be evaluated for each individual property.
Now, here is the best real tip I can give you for getting a good deal. Keep in mind, though, that you should never only focus on these scenarios. You do, however, need to be able to recognize them when they present themselves and act quickly to utilize them to your advantage. The two scenarios I’m referring to are the times directly following a price reduction or when a house falls out of escrow with another buyer. There’s no better time to submit an offer with a chance for a good deal than the immediate hours following one of these events. If you wait a couple days, you’re probably going to lose your window. If a homeowner has to reduce their price, then they obviously missed the mark with the initial offer price and are probably still questioning whether the new price is going to work. At this point, they’re dealing with lots of emotions and a degree of uncertainty. The same goes for when a seller loses a buyer. There’s no way they can be confident that they’ll be able to find another buyer for the same price, so quick action on your part could work in your favor. An experienced agent will navigate all aspects of this process for you, but you’ve got to be willing to put in the time and pull the trigger.