By Andrew Turczyn
With the spring buying and selling season upon us, new home buyer’s will likely face similar market conditions we experienced throughout much of 2013 – historically low
inventory, escalated sale prices, and extremely competitive bidding situations. Typically, it is under these conditions that an experienced Buyer’s Agent can best guide the buyer through the often unchartered waters. Finding the property worth submitting an offer on probably took a few weeks, if not months, and now the contract presentation and negotiation process is the most critical. Here are some strategies that your Buyer’s Agent can review with you to put forth your best effort at ratifying a contract.
1. Pre-inspect: In a typical market, the home inspection is performed shortly after a contract is ratified. Today, however, sellers are likely to consider a contract without an inspection contingency more heavily than one that includes it. Yes, it will involve an out-of-pocket expense before a contract is even ratified but the ability to waive an inspection contingency because you already completed it can be the item that tips the scale in your favor.
2. Be as “Approved” as possible: A short financing contingency is another attractive feature for a seller reviewing offers. By providing your lender all necessary documents for full loan approval in advance of a sales contract, your lender is more likely to turnaround the underwriting quickly and provide the sellers assurance that the deal is solid. Obviously, the lender is not able to provide loan commitment without a sales contract, but they can have everything ready to go once you have a ratified contract.
3. Mortgage shop now, not when you ratify a contract. As you make one of the biggest purchases of your life, you will likely discuss your financing options with more than one lender – and you should. However, this “mortgage shopping” should be done during the “home shopping” stage as well. If you wait until you have a ratified contract to compare lender quotes and estimates, you won’t be able to shorten the appraisal or financing contingency periods.
4. Be Flexible: Sometimes the most important thing to a seller (other than the sale price) is a flexible buyer. Your buyer’s agent should contact the listing agent and inquire if there are any contract considerations that the seller would appreciate. For example, is the seller looking for their new home as well? If so, they might welcome a quick close with a short term rent-back period. Your flexibility in occupying the property over another offer that could not offer a rent-back would certainly be a positive consideration for the seller. Another possible flexible term is the selection of settlement company.
Do the sellers have a relationship with a settlement company that they would appreciate the buyer choosing for the settlement? It’s definitely worth inquiring of the seller’s listing agent.
5. Consider Waiving Contingencies: This strategy is sometimes a tricky one and you should definitely ask your Buyer’s Agent to explain the ramifications of waiving the common contract contingencies – home inspection, financing, and appraisal. Given the legalities and the sometimes negative consequences of submitting an offer without contingencies, it should be discussed thoroughly and strategically implemented. With that said, we have seen numerous examples where the winning contract in a multiple contract situation waived all contingencies.
6. Be Patient: Yes, probably the hardest part of buying a home in a competitive market! Realize that it might not happen the first go-around but you will find the property that is best for you. And when you do, you have some strategies to make your offer as attractive as possible.
About Andrew Turczyn
Andrew is the principal broker/owner of Slate Properties LLC, a full service neighborhood real estate brokerage based in Dupont Circle. The Slate team works with buyers, sellers, property owners, and investors throughout DC, MD, and VA.