Realtors suggest aggressive methods to buy scarce homes
While negotiating and trying to get a competitive edge on an already tight real estate market, realtors are equipping buyers with aggressive techniques to secure that home.
With the current surge of home buying in South Florida, properties are going with multiple offers where buyers would have to come in at least at the asking price, said Chris Camacho, realtor associate at Keller Williams Realty – Premier Properties.
“There’s a multiple offer situation where full-price offers are not particularly enough anymore,” he said. “Depending on the price point, buyers are offering as high as $30,000 above asking and in the higher price points, even $100,000 above asking price.”
Since buyers know that some of these properties aren’t going to appraise as high as the sale price, they’re using language where they are willing to pay up to $30,000 above the appraised value and also just shrinking inspection periods, Mr. Camacho said. “Instead of being the typical 10 to 15 days inspection period, you’re seeing buyers offering five-day inspection periods or three-day inspection periods, just to make the offer more attractive.”
Historically, cash buyers have been able to buy properties with a discount. Now, they’re having to come in at least at full price, and sometimes even that’s not enough as well, Mr. Camacho added.
“I had a cash buyer the other day complaining to me about how he’s putting multiple offers and still getting rejected. Can you imagine a cash buyer complaining? That shows you the market that we’re in right now,” he said. “We tell our buyers to come with their best foot forward because if you don’t, you’re not going to have a second chance.”
Counteroffers, where the seller and buyer go back and forth negotiating a price, might as well be a thing of the past. Sellers are just cherry-picking the most attractive terms, which are usually cash or buyers with a significant down payment, Mr. Camacho said, “and when I say significant, I mean at least 40% down payments.”
Usually, home prices go up around 4% year-over-year, but now they’re going up 15%, said Frank DeValdivielso, who works with his wife, Liede, as a duo team for The Keyes Co.
“We provide clients with the history of the appreciation of properties so that they can see how the properties perform,” he said.
With multiple offers coming in, Mr. DeValdivielso said, he provides market analysis to make sure that his clients know if they are offering above fair market value or below fair market value. “They’ve got to decide what makes sense to them, but in today’s market, most buyers are willing to pay list price or very close to it and in some cases, above list price.”
Buyers need to come in with the best and highest price offer upfront because these sellers are going to pick just one and will not counteroffer, he said. The terms that make a difference and a competitive offer are not just the price, but also how much the buyers are financing.
“I’ll give you an example. We had a listing recently where we did get offers with three or four of them coming in with 95% financing, and they offered above the list price. What that means is they’re risking that the bank perceives the same value that they do for that house,” Mr. DeValdivielso said. “So, let’s just pick a number and say the house was $500,000. They (buyers) came in at $525,000 and putting 95% down. If the house appraises at $500,000, they don’t have the cash to make up the difference, right. So then what we look for is not only the price but the terms. The buyer who won that deal put in 60% financing and 40% down payment. So you see the difference is if there’s an appraisal issue, they’ve got money to make up the difference.”