No, we’re not in a housing bubble again. But it may feel like we are if you are a buyer trying to get your offer accepted on a home priced under $200,000. In certain parts of the valley, attempting to get under contract on a home priced below $250,000 feels like you are going to war. At this point in time, and for reasons too many and too complicated to discuss in this article, the number of people ready and willing to sell their homes is far less than we hope. Listings priced below $150,000 are down 40% from this time a year ago; under $200,000 we’ve seen a decrease of 20%. It’s less about huge leaps in appreciation, and more about limited inventory. If you’re a buyer ready to purchase, you’re probably less interested in knowing the cause of your challenge, and more concerned about knowing how to get your offer accepted!
In the past 6 weeks, I have had three of my clients successfully get their offers accepted on homes by sellers who received multiple offers. It is typical to think that the only answer is to bid higher than the other buyers, and in one of the purchases, we did offer over asking price (as did other bidders). But we are in an environment these days in which appraisers are less likely to “agree” to the value of a home represented by a purchase price. They are more likely to provide an objective value justified by rational data, thereby preventing the wild appreciation spikes we saw in the early 2000’s that helped lead to the housing crash. So what is the answer to winning the bidding war?
If you are working with a Realtor® experienced in serving both buyers and sellers, who understands people, the art of negotiation, the opportunities for “giving and getting” provided by the purchase contract, and the importance of research and conversation prior to making an offer, you will have a much better chance of getting your offer accepted with attractive terms. Crafting an offer on a home is not just about filling in the blanks of a contract. It’s about learning what’s important to the people on both sides of the deal, and then finding creative ways of helping each side feel that they’ve had their needs met. And there are many more ways to meet needs than just a number filled out on the purchase price line of a contract.
In an environment such as we find ourselves, opportunities exist to locate inventory that might not be readily advertised through the MLS. I’ve worked with buyers who were very specific in their desires to be in a particular neighborhood. I’ve been able to identify homeowners who were thinking about selling, and craft a transaction that worked for both buyer and seller. Additionally, I’ve been able to identify available properties with potential that buyers might overlook, to get a reduced price on a home that works well for them.
If you’ve been thinking about purchasing a home under $200,000 but have been discouraged by the buzz about bidding wars, know that under the buzz lies opportunities and the right guide can get your there.
What are some things you can do to help to get your offer accepted?
- Line up your financing so that a strong offer can be written
- Tell your Realtor your story so that the offer can be accompanied by a reason that a seller might accept your offer over another
- Be armed with information so that you know the sale/list price ratio in that market and can set reasonable expectations
- Be certain about your own bottom line and what you are willing to give on so that you don’t get in over your head
- To the degree possible, leave your emotions out of it
- Remember, your Realtor is your consigliere, and that makes you the Don