Who knew that even people who don’t like Las Vegas or gambling in general would be faced with the prospect of making some really heavy bets just to buy a home? Nevertheless, that is the world we’re living in, so shuffle those cards and spin the wheel.
Based on last week’s escalating statistics and lack of inventory, if you’re planning on making an offer on a home in Manatee County, you’ll likely be involved in a bidding war. Redfin Corporation, a real estate brokerage, reported that 70% of the offers written by their agents in January were facing bidding wars. This is the highest since they started tracking bidding wars in April of 2020.
Nothing seems to be discouraging buyers, including rising mortgage rates, and every day it looks like there are more desperate buyers that are coming up with more creative ways to make their offer stand out. However, before buyers get into the realm of the exotic offer, they should start with the basic traditional offer.
Real estate agents are still the gold standard in making offers and effectively communicating the offer to a seller’s agent. A good agent will suggest attractive options without getting into crazy stuff. Likewise, a good agent will advise that you have to move fast in this market. Frequently, agents hear of something coming on the market through the Realtor grapevine and, when that happens, believe it and don’t hesitate.
Don’t even think about offering under asking, and be prepared to go over asking. Also, consider building in an escalation clause to automatically increase your offer if another offer comes in over yours. This, again, is kind of like gambling, so be careful. You could also offer more earnest money at contract above what would be normal to show you’re a serious buyer.
If you’re really into taking a risk, remove the contingencies like home inspections and loan approval contingencies. This naturally means you need to be sure you can get a loan, that the property will appraise, and if it doesn’t, you have the cash to still go forward. Likewise, be confident the home doesn’t have any major structural problems. Finally, cash is always the most attractive offer assuming it’s the right number. Just because you make an all-cash offer, it doesn’t mean you can lowball the offer.
You can, of course, do any number of things to enhance your offer and make it stand out. Here are some of the things other buyers are trying around the country.
After cash, giving sellers time to move and find another home is important in making your offer stand out. But buyers who are out for blood are trying things like offering Netflix subscriptions; airline tickets to out-of-the-country destinations; purchasing something you know the seller wants but would never buy, like maybe a fur coat or tickets for a cruise; babysitting and cleaning services for six months. How about six months’ worth of boat dockage for sellers who need to relocate their boats after moving, or a gift certificate for boat maintenance where you know they do business. The choices are endless, but they won’t trump cash and won’t make a difference if the offer is too low.
Taking a risk in life is part of planning your future, but I doubt American homebuyers have ever been in a situation where taking a risk could involve hundreds of thousands of dollars. Learn to love gambling, because if you’re in the house-buying market, you may need to learn the house rules.
