When it comes to getting the house you want, the main question here is how much do you really want it? With a 46% year-over-year decrease in the housing inventory, and considerably low mortgage interest rates this year, Georgia is finding itself in a firing-hot seller’s market. And this is projected to continue in the early months of 2022 — although with home price growths that will be slower than today.
If new home listings in the next months won’t meet the local housing demand, you can expect that buying your Georgia dream home will take a little more effort. So here are some of the best practices in the market to help you win a potential bidding war or win it before it even starts!
Increase Your Offer Price
In a typical buyer-friendly market, the sale-to-list ratio is below 100%. This means that homes are selling below market price, and you, as a buyer, would be able to score your dream home at an amicable price point. Local markets have varying sale-to-list ratios, and the only way to know how you can be competitive with your price offer is to calculate the sale-to-list value of recently sold homes in your neighborhood/county.
This is done by dividing the final selling price by the initial asking price. For example, if the average initial asking price is $220,000, and buyers purchased homes for $234,000, then the sale-to-list ratio is around 106%. This further means that you should consider offering 6% more of what your seller is asking for to win a bidding war.
Get Pre-Approved
For home sellers, there’s nothing better than a sure buyer. And one way to prove this is if you get a mortgage pre-approval. If you have a great credit history or you pass any of the credit requirements of your preferred lender, it will be easy for you to get approved today.
Why?
Loan rates have declined over the last year because of the pandemic; and while the rates have slowly been picking up since March 2021, experts see that the growth will remain sluggish in the next few months. Low-interest rates mean that lenders are looking for more borrowers, so you might have higher chances of getting pre-approved if you apply today.
Increase Your Earnest Money
Earnest money is not required in real estate transactions. However, it can be very useful, especially when you’re dealing with a very competitive market.
Earnest money is a way of letting your seller know how serious you are in buying the house and that you are ready to buy it now. You’ll have to deposit this to your seller, usually in an escrow account. And don’t worry, the earnest money is not an “additional cost” because it can be part of your deposit or your closing when your offer gets accepted.
Loosen Your Contingencies
Contingencies scare sellers. This is because contingencies give buyers a legal opportunity to retract their intent even when it’s already time to close the deal. When buyers withdraw, sellers would have to relist their homes at the risk of having a lower selling price and more hesitant buyers.
So consider easing on your contingencies. If you can, you can even totally waive all the contingencies to make everything easy for your seller.
Pay in Cash
No home seller can say “No” to cash offers, especially when it’s 100% or more of the asking price. You don’t literally need to shell out your money if it’s too risky. Instead, you can find a private money lender who can loan you the total amount in cash. Private money lenders are known to have lower interest rates than conventional lenders too, so it would be a win-win situation for you, your seller, and your lender.
Consider Offering an Escalation Clause
An escalation clause states that you are willing to increase your price offer if the seller receives a higher bid. This is very useful if your initial offer and contingencies are not that attractive to your seller. If your seller wants to wait for a higher offer, your escalation clause will keep you on his watchlist.
Write a Heartfelt Letter
Buyer “love letters” as what we call them. This is a way to appeal to your seller’s emotions. Although some people argue that personalized letters unintentionally move sellers to violate the fair housing act, this is out of your hands already. At the end of the day, it is a seller’s personal decision whether to accept an offer or not.
Be mindful also when writing your letter. You don’t want to put your guard down and disclose too much personal information that can either make your seller uncomfortable or weaken your negotiating power.
Don’t Rush Your Seller To Move Out
Relocation can be stressful. If your seller is residing in the property being sold, give them a headway by letting them stay even after you close the deal. This can take the pressure off from selling the house and relocating to the next one. You can have them pay rent for a month or lease it to them for free under certain conditions.
Guarantee Your Closing Date
Last is to guarantee your closing date. Home sellers want to sell as soon as possible, but unsure buyers keep this from happening. If you can tell your seller an exact date when you can entirely close the deal, it can make your offer more attractive. But before you do this, make sure that you’ve ironed out your finances.
For more expert advice on how to get the house you want amidst the grueling sea of buyers, work with us at HomeSold GA by calling 770 668 4888.