Multiple offer strategies….and how they might harm rather than help

by | Apr 28, 2015 | Real Estate | 0 comments

Upcoming free (& non-promotional) Home Buyer Education Classes

Saturday , May 9, from 5pm-8pm
Marshall Community Center, conference room
1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)

Thursday night, May 14 , from 5pm-8pm
Marshall Community Center, conference room
1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)

Saturday, May 16, from 10am-1pm
Marshall Community Center, conference room
1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)

Saturday, May 30, from 12pm-3pm
Vancouver YMCA, conference room
11324 NE 51st Circle, Vancouver WA (corner of SR500 & Gher Road/112th Ave)

…if these dates/times don’t work for you, we have others.  Check out the website for more class dates, times, and locations.  PLEASE always check  the web  site www.learningtobuyahome.com  ;  for any changes regarding the classes!

Remember…with reservation…we will throw in lunch, or dinner!  😀
~~~~~~~~~
…and Happy Tuesday~

Let’s be honest here….I have good intentions of getting this out to you every Saturday/early Sunday morning, and then I get sidetracked.  On the positive side I am distracted by helping my clients and/or my family.  🙂 This is positive because I have both.  😀

This week I want to go over some questions I have heard this week, and some things that are coming up on the real estate boards where we (real estate brokers) talk.  Multiple offers are extremely common right now so folks are coming up with many strategies to make an offer look ‘better’ than a competing offer.  I apologize but I am a bit frustrated by what I am hearing from other agents and from people thinking about buying or selling a home.  I understand that it is a crazy market, but folks you need to protect your self.  Contingencies are in place to protect both buyers, and sellers.  Be fore warned, because I am frustrated I will admit that this week may be a bit of rant… 🙂  Hold on tight….

So, with the current market being so supply limited and demand heavy, there are reports that buyers are giving up inspection periods, and/or appraisal contingencies.  I am not a fan of either!  These contingencies are in place to protect both the buyer and yes, the seller too.  In Washington the inspection period is 10 calendar days.  By the end of the 10th day the inspection response for any possible to repairs to be negotiated needs to be submitted to the sellers agent.  If you do not then you give up any right to any repairs.  If you give up the right to the home inspection contingency you can still have the home inspection, but if the inspection turns up something major , the buyer still DOES have the right to back out, but it will cost the buyer the earnest money.  Same thing with the appraisal contingency…what happens if the home doesn’t appraise for what the buyer is trying to buy it for?  Well, the bank will only lend the buyer either the purchase amount, or the appraised value….whichever is LESS.  If you are the buyer, this means you would have to bring in XX amount of cash over what the value is, or back out…and again, lose your earnest money.  For a seller, both of these are a danger because what happens if the buyer buys the home without a home inspection, or inspection contingency?  What happens if they later find something that would have been a deciding factor in their going forward?  What happens if the buyer feels this is something that the seller should have disclosed?  What happens if the seller didn’t know about this?  What happens if they did, but how can you prove it?  See….giving up the inspection contingency is a barrel of monkeys waiting to be opened…..and NOT the fun kind either!

So what about the appraisal contingency?  You read how it can be an issue for the buyer, but what about for the seller?  Well, it is coming to my attention where some buyers are writing the offers for WAY over the listed price.  This is NOT a good thing!  Many sellers are under the impression that the buyers & sellers decide the worth of a home, but this isn’t true…the appraisers actually decide the value of the home.  It does not matter what someone is willing to buy it for (unless they are a cash offer), it matters, loan-wise, what the appraiser says it is worth.  So, lets’ say the buyer offers XXX amount to purchase the home, but the appraiser says the home is only worth XX amount?  Well, the seller (usually) has an offer on a different home using that sales price on their old home.  Their home then fails to sell, and so does their offer on the *new* home….and let’s take this one step more forward….what happens if *those* sellers had an offer made on a different home that now they can’t buy because their buyers couldn’t buy because their buyers couldn’t buy their home… WHEW!  Believe it or not…this has happened!  Of course, now the sellers think their home is worth XXX amount when….no, sorry, it really is only worth XX amount.

So why is this happening???
Supply & Demand.  The current market we are in has a low supply of homes for sales, and the buyer demand is very high.  Part of the reason why the demand is so high is that many people are worried that the interest rates will go up…and yes, they will.  However, buying a home for more than the market value is NOT a good idea…..EVER.

Whether you are the buyer or the seller, you need to know what the comparable homes are selling, or have sold for.  When listing a homes, I pull up the pending homes, homes that have sold in the last 6 months, and the homes that are currently active and that again….are comparable.  I will base a listing range off of these knowing that the current condition of the home will further define the market value price of the home.  This is why I start off with a range.  When working with a buyer, each area has a different price range for their homes as no two homes are sold the same. Put 2 different homes in 2 different areas of clark county and the price difference can be anywhere between $5000-$20,000 different in price….and one story homes sell for more price per square foot than a two story home does.

Your agent should have the experience and the cajones to tell you if a home is over priced….or listed for too low.  Some agents will list a home very low to increase the ‘bidding war’ possibilities.  They tell their sellers that this is a good thing for them because then buyers are fighting for the sellers home, but this is pretty crappy.  This is a healthy sellers market….a sellers agent should be sitting down with sellers with a list of comparable homes and paperwork to support their advised listing price.  Then, on the opposite side of the spectrum, there are agents who are throwing crazy high listing prices out there to possible sellers just to get their listing.  This is also awful for the rest of us because the home has a minimal chance of getting appraised at that price!  GRRRR

In short…Do NOT give up your right to a home inspection contingency period.  Do NOT give up your appraisal or financing contingency!  Do NOT write your offers for $20,0000-$30,000 (and more).  There are times in a multiple offer situation where we do write the offer for more than listing price….maybe you add the closing costs on top of the price…and maybe you add a couple of thousand on top of that to hopefully be the top offer….this is pretty common….but ONLY if the market can bear that price!!!  This is where your agent needs to be helping you.

Are we in a bubble?
This is a question I was actually asked this week, and my answer…. in some areas & price ranges…yeah, I do think so.  It isn’t a big bubble, but some of the things going on right now are very reminiscent of what happened in the mid-2000’s.  I think some of that has to do with so many new agents in the industry though too.
Please never feel like you have to do anything.  Yes, a buyer (and a seller) need to be reasonable about what the current market is.  Your agent works for YOU, and part of this is giving you accurate, realistic, and current information.  You may not like what I have to say, but I won’t sugar coat anything….a good agent won’t.  I always tell all my clients that I will do my best to help them buy the best home I can in their price range, but I don’t have a magic wand.  I am not in any hurry, and am not a fan of rushing anyone.  Buying (or selling) a home is one of the biggest things you will ever do.  This is YOUR mortgage.  As always, ask questions, I am always here to help.  For your first time, and for every time… for keys, and after…. I am not going anywhere.

Whether someone is buying or selling a home, their agent is to act as a professional and experienced adviser.  As a real estate broker, I am licensed to help people buy or sell a home, but again…..as I have said before…YOUR home buying (or selling) adventure is only as good as the team you hire to help you.

…ok…rant over!….  😀

One last thing you need to remember is that a real estate agent is not a sales person.  It is not our job to ‘sell’ you anything.  We are assistants,   advisers  , guidance, and help.  You should not feel as if your agent is trying to sell you a home, or anything else, our job should be to help you in getting the home you want.  This being said remember that you do not get T-Bone steaks for the price of hamburger…Look ONLY at homes within your budget.  ALWAYS ask questions, and expect answers without a lot of lingo.  I was always told that if you can’t explain something in a way that the other person can understand clearly, it is because you don’t understand it yourself.  🙂

Information is power, and I hope that I am able to help you.  Good luck, and as always…May the odds be ever in your favor out there….  If you are looking for a real estate agent, I would love to be able to help you.  
 
As always….this is just a quick overview…. please remember that your agent, and your lender work for YOU.  You drive the bus…we are merely GPS to help you get to your goals.  Like the classes, this weekly blog email is to help you with your homebuying adventure.  The goal is to be informative and non-promotional.  🙂  We are, however, hoping you will call and want us to help with your adventure.

If you have any questions about this, or something you have heard…or if you would like me to help you with your homebuying adventure, please call, email,   text, or facebook me anytime.  I am, as always, happy to help!

Thank you again for your business and your referrals!!  …and thank you for referring these classes to your friends, family, and co-workers.

.  ..disclaimer…if you have already purchased a home, or would no longer like to receive these emails, please let me know and I will be happy to remove you from any further mailings…

Next Week:    Mortgage vs Rent…How does that work?

Last Week:  The “hidden” fees of buying a home
                     
Have a great day, and I will talk to you soon,
;-D

Tracie DeMars / Realtor

ReMax Equity Group
License# 81289
Vancouver, WA
360-903-3504

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