Buying a house can be a sellers dream and a buyers nightmare. I've talked about this quite a bit lately and i can't believe it but it just happened AGAIN! if your selling your house and its priced right, don't be surprised if you end up in a bidding war.
And if YOU’RE the buyers, all I can say is, make your BEST offer, AND move fast.
Or you're likely to be in a multiple offer situation or it'll be gone before you even have a chance.
Here's why...I just listed a SENSATIONAL townhouse that we priced at 629k. Right next door was a townhouse that was on the market for almost a year and it was listed for 46,000 more and didn't have half the upgrades.
I had a client who wanted to see both properties. So we made a date. The very next day, I got a good offer, and my listing went under contract. So now next door was their only option. Ok fine, they could deal with that. But it was $46k more and didn't half the features my listing had, It didn't have the FP, It didn't have the $20k Crestron sound system, It didn't have the commercial grade kit, With an island, or the custom millwork, Or the epoxy garage floor (and that's not all...) They decided to bring a contractor to see how much it would cost to bring it to speed. The contractor wasn't free until Saturday. For like 4 days. In the mean time, a buyer saw the place, put an offer in and… it was gone, So in a matter of days, a unit that's come on market and flew off and a unit that's been on forever got sold. Needless to say, they were so totally excited to buy either of these and in a matter of hours, they both sold. Totally heart broken. And that's because the price on my listing paved the way for next door to sell.
Buyers were paying attention. When a property finally hits its trigger price, the overpriced neighbors sell too! Makes sense? Perfect example of how waiting can cost you.
So now let's talk about how t makes your best possible offer!
There are about 6 terms your relator will be negotiating for you.
Your agent should help you establish the strongest offer you can make. And that isn’t just the price. These other terms can definitely sway a sellers decision.
Can your close at the convenience? That’s often helpful. If you’re getting a mortgage, how fast can they get it done? 4 weeks or 6 weeks?
Most offers have Attorney Review and Inspection contingencies. It's referred to as A&I
The 6.1 multi board contract I use defaults to 5 days to get this done, but if you need more time, you can write 7 - 10 days. AND ON THE FLIP SIDE if you’re in a multiple offer situation, maybe you can tighten a/I to 4 or even 3 days.
If the house is 'in estate' or Bank Owned, there selling it 'as is' in which case you as the buyer are absolutely entitled to DO an inspection but the seller is stating they don't know about anything about the house. And they're not willing to negotiate inspection issues.
In a regular situation, when you do the inspection. I always suggest to my clients to try to focus on the big picture
and focus on the important things about the house they want to buy: I would say those things are any material defects, health concerns and safety issues.
And buyers need to know there's a line on the contract that says "a component isn't deemed defective just because it's old." This is a really important part of the inspection, So, if it's still working, it's NOT an inspection issue!
Another negotiable term is the Mortgage. If you'll need your purchase to be contingent on getting a loan,
you should talk to your lender and know what you're buying power is. I like to have a copy of your pre approval letter in your file so when you find that perfect house, you're ready to go. The offer I present show sellers we're real, organized and serious.
Ok so many people don't know this...but there are actually 2 types of CASH offers!
One is real Cash, and the other is CASH W/ MORTGAGE:
If you making a real Cash offer, it's a good idea to have proof of funds ready to demonstrate to the seller you're ready with the liquid cash. There are a few different ways to do this. And sellers usually want to see it.
The other type of cash offer is Cash with Mortgage. For this type of cash offer, the buyer is waving the mortgage ‘contingency’. This is also a great buyer because they're HIGHLY qualified and completely confident the funding is doable. So while they're getting a mortgage, the offer isn’t contingent on it. And also be prepared to show proof of funds.These are the 2 STRONGEST OFFERS A BUYER CAN MAKE.
Even in a cash situation, I recommend buyers get an appraisal.
it's basically a comfort to know the value of the asset you're buying meets the price you're paying.
Another term option is a ‘Home Sale’ contingency.
If you fall in love with a house that’s been on the market a while…the seller may be willing to take Home Sale Contingency. Here’s how that works: You as the buyer need to get your home under contract and as soon as your house is under contract, you'll wave the contingency, At which point you're all in for buying THIS house. It’s a good solution for sellers because they have a buyer who’s locked into buy their house as soon as their buyers house in under contract.
And another not so certain option is a Home to Close Contingency. This has a few caveats: You typically see this with hard to sell houses and usually they’ve been on the market for a long time.
The seller is willing to take your offer and let you
1) Put your house on the market,
2) Then get your house under contract
3) Close on it!
4) And THEN buyer is locked into buy this house.
So the difference between HTC and HS for a buyer is, one scenario tour houses buyers house has to go 'under contract' & the other is it may not even be on the market yet. In both cases, the sellers have kick out clauses. That means if someone else comes alone and puts on an offer on your dream house while you're trying to sell your house, you have a 24, 48 or 72 hour kick out period to either wave your home to close or home to sell contingency or opt out on the house you were hoping to buy and gets released to the other party.
In Illinois taxes are paid in arrears so if your closing in June if 2017, The tax bill will come to your house in 2018. And you will pay the sellers portion for the period they owned the house.
So the sellers give the buyers the portion they owe plus 5% in case the taxes go up.
So in essence the buyers pay your bill when the tax bill comes the following year.
If there’s a Condo HOA that too gets prorated.
So to recap, the terms your realtor negotiates are: Price, Closing Date, EM, Mortgage contingency, Appraisal contingencies, Home Sale, Home Close Contingencies and Prorations.
Heres how I like to see the offer packaged... I put together a concise professional presentation.
1. The Offer
2. Copy of Earnest Money Check
3. Signed disclosures
4. Pre-approval letter (Or Proof of Cash Funds)
5. MLS listing sheet
6. And last if you're trying to win over the sellers, the buyers can write them a personal note!!!
Then on the last day of A/I, your attorney will communicate with the sellers attorney. This email correspondence includes contract modifications and the inspection issues.
Call me if you're looking for a positive experience. Happy Memorial Day Chicagoland...