■ By Matt McPherson / Columnist
The San Jacinto Valley residential market is as hot as it’s been in more than a decade. With demand surging and supply diminishing, it is increasingly becoming a seller’s market. Multiple offers on almost every listing, and even some all cash offers give sellers the option to pick and choose their buyer.
Cash is king in this market and helps you avoid the scrutiny of banks and lending institutions and also speeds up the escrow process. However, not everybody has stacks of money lying around for a home purchase. Numerous factors determine whether your offer will be considered, let alone accepted, and with competition for desirable residential listings skyrocketing, having a basic understanding of what sellers look for in a buyer or offer will determine your success. Here are some suggestions that may improve your chances of having your offer accepted.
1. Of course price is the first thing the sellers will be looking at and in this market offering 5 percent and sometimes 10 percent above list price is not uncommon. Value is rising at an almost daily pace that can’t be calculated efficiently based on surrounding sales or Days on Market (DOM). Demand is the catalyst driving prices to pre-recession levels and with a scarce supply, value is driven up even further. If you find a home you love, be prepared to offer more than its listing price.
2. The type of loan can also be a determining factor from the seller’s perspective and may jeopardize your chances of getting an offer considered. Many FHA and VA offers are rejected because of guidelines that restrict the amount of out-of-pocket fees from the buyers that may compromise the loan amount. Some buyers willing to pay out-of-pocket to make up the difference between the loan amount and accepted price find their hands tied by the lender’s regulations.
A variety of conventional loans are emerging as the preferred way to finance, especially among millennials who prefer to pay more up front to avoid private mortgage insurance (PMI) until 20 percent of equity is gained in the property. Conventional loans requiring only 5 percent down are becoming even more popular. With an affordable down payment and fewer requirements and restrictions than the traditional FHA guidelines, these types of loans will allow for the buyer to pay out-of-pocket costs to make up the difference in the accepted offer price.
Make sure to contact a local lender familiar with your market and a good understanding of your particular situation.
3. Terms are also a driving factor for sellers when reviewing multiple offers. Terms can refer to the type of loan, which escrow and title services are requested, the petitioning of repairs or upgrades, in addition to fees solicited. Buyers who ask for sellers to pay for inspections, warranties, or repairs are getting tossed aside for buyers that are willing to take the property “as is.” In past years, requesting repairs and asking for a home warranty was not uncommon, whereas today asking for the seller to pay for a warranty or repairs may cost you the house of your dreams.
4. Presentation and rapport between buyer, seller and the agents may seem trivial but can affect the communication throughout the selling process. Competition, rivalries, and discourse among the parties are rare, but do occur and can affect the sellers’ decision-making process.
In past years, requesting repairs and asking for a home warranty was not uncommon, whereas today asking for the seller to pay for a warranty or repairs may cost you the house of your dreams.”
Always be respectful and courteous to the property owners and their agent. If the layout or lifestyle of the occupants is disagreeable to you, keep it to yourself. Criticism of a property, especially in front of the owner or tenants, can get your offer thrown to the bottom of the pile. Pride of ownership is a major psychological factor, so always try to praise the property owners for something you like about the property. It helps establish rapport and let the sellers know the property is going to someone who shares their passion for the home.
5. Sentiment, just like presentation, can also establish a rapport or connection with the sellers and make your offer stick out even if it’s not the highest bid. It is always encouraged to write a sentimental letter introducing yourself or your family to the seller and lay out your future plans for the home.
This strategy is a huge factor for young couples and families that plan to make years of memories in a home they love and creates a bond between the seller and buyer. Discussing the love for the property and how it relates to you or your family can make a tremendous difference.
6. Last but not least, always choose a local real estate agent who is familiar with the neighborhoods, demographics, and market conditions in your area. Find out if they attend City Council meetings, understand the school district boundaries, and are updated on the infrastructure changes in the area. This may sound trivial, but will give you an in-depth understanding how politics and development can play a factor in your home’s value down the road.
Matt McPherson is a licensed real estate agent with Coldwell Banker Associated Brokers, BRE # 01362837. Reach Matt at 951-315-7914 or MattMcPh@ColdwellBankerAB.com.