Home Buyers: How to Win in a Multiple Offer Situation.

It’s a great time to buy real estate — really.  I know the real estate world was touting that line in their marketing campaigns a couple year back as prices were plummeting and tax credits were being offered to first time home buyers.  I didn’t really buy into it then.  I truly believe it is a great time to buy now.  I’m confident we have seen the bottom of the real estate market and are well into the beginning stage of recovery.

It’s ideal to buy as prices are going up, and with interest rates hanging in the 3s, now is a great time to grab a piece of the pie.market on fire

There are challenges in purchasing in today’s market.  With inventory low and demand high, multiple offers are common place – especially in the Orlando area market.  On top of that, cash is king and as of late nearly half of all real estate sales were cash deals

What does that mean for the average buyer, dependent on financing, and ready to buy?  It means be ready to act, swiftly and with precision.  It means stay positive and keep in mind that everything happens for a reason. It is possible for a first time buyer to beat out the hedge funds, investors and others with deep pockets.  It may take a little more time and the possibility of being out bid a couple of times before securing a home exist.  (This is where staying positive and knowing everything happens for a reason comes into play.  If the winning bid wasn’t yours, then there is a reason that house was not meant to be.  I am a strong believer in this and have seen this theory proven first hand time and again.)

I have had a number of buyers beat out cash offers – strong cash offers.  It is being done, and I am about to tell you how.

First and foremost, make your first offer your strongest offer.  Agents are not required to Lisa Jones Sale Pending Orlando-001disclose whether a property has multiple offers on it.  Don’t assume yours is the only offer, and don’t assume you will be given an opportunity to negotiate.  It’s quite possible you will not be given the chance.

Often times I have seen buyers disappointed that their offer was not the winning offer.  I have heard the phrases, “I should have gone up $5000” more times than I would like to count.  Honestly, $5000 in the grand scheme of things will not make a whole lot of difference in a mortgage payment (maybe $20- $30).  It could make the difference between an offer being accepted or rejected.  Knowing you gave your all should provide comfort if your bid is not the winning bid.  This was you know you gave your best and don’t keep yourself awake at night wondering “what if” or “would’ve should’ve could’ve.”

Strongest offers also include things like strong escrow.  Your good faith deposit needs to be attractive.  (1-2% of the purchase price is customary in the Orlando area market).  Putting $500 or $1000 down on a $100,000 purchase does not say “I am a serious buyer” to a seller.  Putting $3000-$5000 down speaks a little louder.  (Keep in mind this good faith deposit, your escrow, will be applied to your down payment and closing costs.  It is all going towards your cost to purchase anyway.)

Strongest offers also include things like reasonable closing times.  If the house is vacant, the seller will likely want to close as soon as possible.  If it is a short sale, you have a better chance of the offer being accepted if you agree to wait for short sale approval for an extended period of time, say 100-120 days instead of the customary 60-90.  If the house is occupied and it is a traditional sale, try to find out how much time the seller would like to close.  If you aren’t able but notice there is a lot of stuff in the house, giving 60 days to close 16019 arrowheadcould make the difference since the idea of packing up an entire household in 15-30 days could be a little nerve racking for a seller.  Not everyone likes the idea of a quick close.  Tailor your closing date accordingly.

Strongest offers also include few contingencies or short contingency time lines.  When writing an offer, the less you ask for, the more attractive your offer is.  Get inspections out of the way in 7-10 days.  Do not ask for a Home Warranty just because you can.  Do not ask for the seller to contribute to your closing costs if you don’t need the help.  If you do need the help, don’t ask for more than is necessary.   Keep it simple, keep it clean.

Another way for buyers needing financing to find success in today’s market is to seek out homes where owner-occupants have the first right to purchase.  Being able to cut a big chunk of the competition out of the game is definitely a plus.  Homes with First Look Initiatives and Neighborhood Stabilization Programs (NSP) give owner-occupants (not investors) the first right to purchase within a certain time frame – usually the first week or 2 the property is on the market.  Often times, these homes are in good shape and move in ready.  Granted there will likely still be competition; not nearly as much at there would be if investors were able to bid.

Lisa Jones Realtor at Keller Williams Sells HomesLastly, be prepared to pay a little more than market value.  I would never counsel a client to pay an outrageous amount over market value.  Sometimes the need arises to pay a couple/few thousand more than appraised value.  If you love the house and have the ability to do it, do it.  Often times paying a little more now is worth the time and expense of having to start all over again in the home search (including paying for home inspections and appraisal.)

Allow yourself some wiggle room as well.  If you are qualified up to $150,000, you may want to limit your search to properties up to $130,000 to start.  This could give you the cushion you need to have a little more offering power.

In conclusion, multiple offers can be challenging.  Patience is required.  Having the ability to act fast when the right home is found is crucial.   He who hesitates often times loses in this market.  Be ready to act.  Get qualified with a lender before you look at houses.  Know your budget, keep it in mind.  Do not stretch yourself beyond your limits but be prepared to stretch for the right house.

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Visit to Trilogy in Groveland, Florida

I made the time to pay a formal visit to Trilogy a couple of days ago.  If you aren’t familiar with Trilogy, it is a gated and manned community for the active adult a/k/a 55 plus.  The community was conceived and started during the boom years.  At that time it was known as Cascades.  Unfortunately, the economy crashed and construction stopped abruptly.  I felt so bad for the few folks that purchased in the community and had none of the amenities or neighbors they were promised.  All I can say now is, those home owners that hung in there are now reaping the benefits of Shea Homes completing this neighborhood.

 I had been to Trilogy a few times in the past.  I had a shown a few resales and been to a Chamber event in the pool area.  This visit was different though.  I visited the sales center and was given a wonderful tour of the clubhouse by one of Trilogy’s sales reps, Diana Stone.

Trilogy boasts a 55,000 plus square foot club house, Magnolia House Members’ Club,  that is quite beautiful and substantial.  The décor is contemporary while holding onto classic ideals.  There is a gorgeous restaurant open for lunch and dinner on select days which boasts formally trained chefs who have worked in some of the most demanding kitchens.  There is also a private kitchen with room to entertain where residents can take cooking lessons with a trained chef or entertain others in a casual, comfortable atmosphere outside of their own home.

Trilogy also has an adorable arts and crafts room where adult can craft and create and bring the grand children to enjoy some of the fun, too.

There is a card room for poker and the like where drink service is provided.  In fact, cocktail service can be had in an area of the clubhouse – except the workout facilities of course.

 And the workout facilities are beautiful, top of the line and technologically pleasing as well.  (All the treadmills are wired for tv and internet).  Ladies that are not inclined to workout in the presence of the opposite sex can enjoy a separate exercise area off the ladies locker room that is Curves® inspired.

The locker room come equipped with everything you need including soap, shampoo, conditioner, etc.  You can even get a massage while you’re there, too (at very competitive rates.)

There is an indoor/outdoor heated pool which is a staple to any 55 plus community.  Trilogy’s clubhouse also includes tennis, bocce and pickle ball courts.

 Overall, the clubhouse and its offerings were amazing.  The more I saw, the more I kind of wished I was 55 or older – or neighborhoods like this were constructed for young to middle aged adults and families.  Wouldn’t that be wonderful (hint, hint Shea Homes).

 After touring the clubhouse I took a stroll through Shea’s models which start in the $180s.  They were all elegantly decorated and had really functional floor plans.  The kitchens were open, had ample (granite) counter space and cabinet space as well.  My favorite part of the kitchens were the gas stove.  (Jenn Air appliances are standard) Florida kitchens have been equipped with electric stove predominantly, but as more people from the North move in and more builders see the benefit and savings in using natural gas, we are seeing more gas stoves.  I love cooking with gas.  It took me forever to adjust to electric cooking, and I don’t think the adjustment has gone well.  Fortunately, my husband has been helping out with meals a little more lately.

Shea’s home are stunning and well thought out.  Master bedrooms are sizable but not so extreme where other rooms in the house suffer for it.  The bathrooms are tastefully designed and the master bathrooms all feature dual sinks, a tub and roomy shower space.

The best part about Shea homes and the Trilogy community is the energy efficiency.  Trilogy is the only community in the area that builds energy efficient homes with ZERO electric bills. Low flow fixtures, sealed duct systems, high performance insulation, dual pane Anderson windows, energy efficient lighting, low volatile organic compound (VOC) paint, eco friendly materials and solar powered system are all included in Shea’s homes in Trilogy.  Trilogy has embraced the use of energy efficient technology and the power of the sun (solar enegry).

 If you would like to schedule a tour of the community or would like information on any of the new homes or resales, please feel free to contact me.

 

Got Equity? Think Twice about Using It.

Rumor has it that since more people are living in homes with equity that more homeowners are going to feel more confident about the economy and take out home equity loans.  I caution those considering doing this to think twice.  Think back about 7 or so years ago to when the housing market was booming.  When many couldn’t see an end to rising home prices in sight.  When many took out home equity lines and second mortgages for purchases like new cars, new boats, lavish vacations, investment properties and the like.  We all know what happened after that.  In fact, most of us are still feeling it.

Are all home equity lines bad?  No.  Not if you want to remodel your kitchen, update your bathroom or upgrade your flooring.  Projects like this should give a return on the investment – not 100% though.  If you are planning a home renovation, do it because you want to.  Do it because you will get pleasure out of it and enjoy it.  Don’t do it for the dollar signs….no home improvement project that I know of will give 100% return on the investment.

So please, I beg you, if you are considering taking out a home equity line of credit or a second mortgage now that your property is in the black again, please think twice.  We saw what happened a few years back when everyone was spend happy and not considering the what ifs.  Choose wisely, spend smartly, and ask yourself at least 3 times, Do I really NEED to do this?