REThink Real Estate
REThink Real Estate
Q: My daughter and her husband-to-be, who are both 21, are trying to buy a house and have put many offers in on various homes. They already are preapproved for the amount they need. Every time they put an offer in, even on houses that have no other offers, and that have been on the market for a long time, all of a sudden many offers come in -- sometimes within 24 hours!
Then the bank goes with the higher offer, which confuses them because their agent told them there were no other offers. This has been very depressing for them.
They are getting married in June and would like to purchase a home before then, so they have a home to move into after the wedding (they both still live with their parents). Is there anything they can do to resolve this problem? --Julie R.
Being a buyer in today's market is nearly as frustrating as being a seller. You read and hear all day long about what a strong buyer's market it's supposed to be and what great deals there are to be had via foreclosures and short sales.
But when you start making offers on properties you find that the banks are nowhere near as willing to negotiate as you expected, and that many of the bank-owned homes cannot be bought without prevailing over a sea of other offers.
Depressing and frustrating -- yes. But there are some strategies they can and should put into play to better their chances going forward.
With an individual seller, you can minimize the chances of being outbid unawares in a couple of ways. You can put a very, very short time frame on your offer, eliminating a window of opportunity for other buyers to swoop in on the property.
Also, most listing agents in "regular" sales want their clients to get the highest possible price for their home, so it's common for them to ring up any previous offerors to let them know when additional offers have come in, to give them an opportunity to increase their offers or otherwise make them more competitive.
You can't force a bank to respond to your offer in a very short time frame, or in any time frame at all, for that matter. I once sold a bank-owned property in a transaction where the time frame between when we submitted an offer and when we received the signed acceptance back from the bank was nine weeks.
But what your daughter and future son-in-law can do is go into these transactions with the lessons they've learned thus far.
Whatever it is that caused them to be interested in this property at this point in time could very well be inspiring other buyers to make an offer at the same exact time. So, even when their agent is told that there are no other offers at the time they make theirs, they need to do several things.
First, they need to enlist their agent to stay in very close contact with the listing agent -- as often as two or three times a day is not overkill -- once their offer is submitted.
Your daughter's agent should not only be calling the listing agent frequently to check and see whether other offers have come in -- they should also be asking the listing agent upfront to notify them if additional offers come in. That way, your daughter and her fiancé may at least get the chance to try to compete with the other offers.
Additionally, your daughter should consider changing her approach to formulating the price she offers for a home. She will have a better shot at getting a home if she offers a price more in line with the recent sales in the area, versus just offering something below or even at whatever the list price is on the assumption that she has no competition.
Every time she wants to make an offer, she and her mate should sit down with her agent and get an analysis of the recent sales of similar properties in the area. If she's making an offer on a bank-owned property, she should look at those sorts of sales. It's critical that she not only look at the recent comps' list price, or sale price, but their list-price-to-sale-price ratio.
For example, if a home's list price is $100,000 and it sells for $110,000, the list-price-to-sale-price ratio is 110 percent.
From what you've said, it seems that it's pretty common for these homes to sell over asking. If she can work with her agent to determine how much, on average, over asking these homes typically sell for, then she can apply that ratio to the list price of the home for which she wants to place an offer.
What’s next for ActiveRain?
What's Your Home Worth?