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Seattle Foreclosure has several offers, 2 all cash

Homebuyers: Be Prepared to Make A Few Offers Before Getting “Accepted”

A few weeks ago on Trulia a buyer wrote in asking about the number of offers that buyers today generally have to make before they have an offer accepted. They said that they have been looking for quite some time and it seemed like when they finally found something to put an offer in on, their offer got beat out by cash investors. They went on to say how frustrating that was and because supply is so limited right now, it may be months before something comes on the market that meets their needs.

Sounds about right to me. In my business I am seeing buyers who are looking for fixers/mild fixers/foreclosures in “in demand” areas, under $400k, submitting about 3-6 offers before going under contract with a seller. A broker friend of mine wrote 9 offers for one of her clients before the 9th was accepted. If you think it’s a really good deal, chances are others do too. Especially investors with cash. If you’re using financing, it’s pretty tough to win out against a cash buyer. But ignore that for now. You can only do what you can do.

So are you doing all that you can do?

Here are some suggestions for beating out the other offers when you throw your hat in the ring.

1. Consider Short Sales - We eventually decided that for 2 of my buyers having the same troubles, that taking our chances with short sales was the way to go – at least until there is more inventory. Short sales can be uncertain, low probability, time consuming, and generally pretty frustrating but they are also less desireable. And therefore there is less competition.

2. Full Price Offers (or Better) with Aggressive Terms- Are you writing full price offers or better? This may be tough to think about because you’ve been told that we’re still in a buyer’s market (technically we’re no longer in a buyrers market, we’ve just barely entered into a balanced market) but any multiple offer situation you are in will likely require you to submit an offer above asking price. I have had buyers who insisted on writing offers that we thought were too low, only to find out we were right. Are you willing to waive inspection or do a pre-inspection? Are you supplying a solid lender approval letter?

3. Hire a FREE Realtor - Are you working with a real estate broker? If not, you’re missing out on valuable negotiation assistance, advice, and market info. A colleague of mine is working with a group of out-of-state-buyers and they’ve been so misinformed about the Seattle market, they’ve lost out on a couple of properties. The misinformation can stem from media outlets, friends, family, co-workers, etc. Buyers also tend to rely to heavily on data and statistics about the greater Seattle area when in fact there are micro-climates and neighborhoods throughout the Seattle area that have very little to do with the larger picture. A broker specializing in your area can really pinoint market stats for your area, help you set expectations, and get you in sync with the current marketplace.

4. Take advantage of First Look Initiatives - On certain foreclosures, the banks or Fannie or Freddie will give owner occupied buyers the first shot. Duing this phase which is anywhere from 5-30 days after the home is listed, the bank will only consider owner occupied buyers, not investors. On these homes getting the offer in ASAP usually knocks out the investors who often have a waiting period, with owner occupied buyers being favored.

5. Go With The Flow- By now you know that if you fall into this market, you may get put through the ringer a little. I suggest that all buyers adopt an attiude of “High Involvement, Low Investment”. Meaning that they do all that they can to make the deal, but they do not get emotionally devastated if the deal doesn’t happen. This attitude also allows the buyer an upper hand in negotiation.

6. Give Yourself More Time - Sometimes it can seem like buying a home is like buying a car – something that can be done in a few weekends. But you generally need a few months to complete the action. When you are experiencing multiple offer markets and low inventory, give yourself 4-6 months.

For well meaning buyers with the intent to close quickly, and the brokers who are working hard to make the deal happen for them, this situation can be a little deflating. Hang in there. It’s clear that any well priced, decent, move in ready home is going to get attention today. But buyers: Please don’t give up! It is a great time to buy, rates are low, and only thing worse is if you end up not buying a home!