Thoughts From The Frontlne

In the month of February, 65% of the single-family homes sold on the Eastside sold above their asking price (up from 34% last year) and the average time on market for these listings was 5 days. Translation: Offer review dates and multiple offer scenarios are just part of the process if you are buying or selling in our area. Here are some thoughts from the frontline on how to successfully navigate today’s reality.

I’ve represented either the buyer or the seller in 11 transactions so far this year ranging from single family homes to high rise condos to townhomes in a variety of neighborhoods and at a variety of price points. These deals came together by aligning the needs and motivations of buyers and sellers, and almost all of them utilized some or all of the tactics below to make that happen.

Today’s sellers are looking for offers without escape hatches that would allow buyers to exit the deal without penalty. In addition to waiving inspection, financing and other contingencies, which is often required these days, one effective way for a buyer to indicate that they are qualified, serious and GOING TO CLOSE is to release their earnest money to the seller as a non-refundable deposit. If you think this one through it’s not as crazy as it might sound. The released earnest money is fully applicable towards the purchase price and still counts as part of the down payment if there is a loan involved. In other words, you are going to part with the money anyway and giving it to the seller up front makes the offer that much stronger in their eyes without adding any additional cost to you.

Much is made of how buyers can compete with “cash” offers. Keep in mind that except in rare instances, the seller is going get “cash” at closing anyway, and the only real difference between a cash offer and one that is financed is the risk to the seller that the deal might fall apart because the buyer’s financing doesn’t come through. Having $50,000 or $100,000 of the buyer’s money in their pocket and non-refundable makes it a pretty good bet that the buyer is going to close and effectively as good as cash.

Since buyers effectively give away any rights to exit a deal without penalty when they release earnest money, some serious due diligence is required before doing so. I’d recommend working with a known, local lender who can give you the needed confidence in your ability to get financed. Buyers also have to be completely confident that they understand as much as possible about the condition of the home, its main systems and the property being purchased before waiving an inspection contingency. This often means hiring a home inspector to conduct a thorough inspection BEFORE making an offer.

Give me a call if you’d like to talk in more detail about how all of this works in a real transaction scenario. There are proven strategies for both attracting airtight offers as a seller, and for making them as a buyer and neither has ever been more important than in today’s competitive marketplace.

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