Arlington is experiencing a very hot real estate market. Not all properties are hot, but some are really hot. Most buyers want the what I call “cream puffs” – properties in a great location, with a good layout, in move-in condition. Those properties are flying off the shelves with multiple offers. If you would like to increase your odds of buying one of those properties – here is what you have to do:
1. Move fast – as soon as the property is o the market – go and see it right away. Don’t wait for the open house, because there might not be one – as it could be “under contract” by then. Once you see the house and you love it – you have to make an offer right away. I know some sellers set a deadline for offer, but you can still make an offer and put a an expiration time.
2. If you make an offer before the open house – you have to make a really good one – probably above asking price. Most sellers believe in open houses and will rarely consider an offer below asking price. So if you really want the house – you have to be BOLD. Make an offer they will worry about loosing.
3. What makes a great offer:
- Price – a full price at a minimum.
- Large Earnest Money Deposit – think BOLD – like 25k, 50k, even 100k. This deposit shows how serious you are – it goes towards your closing costs and down payment at the end, but if you decide to cancel the deal before closing – you will be at risk of loosing it. A minimum should be 2% of sales price.
- Settlement date convenient for the seller. If the seller needs rent-back after settlement – ask for a security deposit, but consider giving them free rent-back.
- As few contingencies as possible: Can you remove financing contingency? Some lenders can give you a full approval subject to title work – this way you can wave financing contingency. Can you remove appraisal contingency? This one is a tough one to wave – what if the appraisal comes in low and you have to cover the difference? Can you wave home inspection? This one is a tough one – you could get an inspection before submitting an offer to make sure there is nothing majorly wrong, you could get ages of all systems in the house, you could budget a certain amount of money for potential inspection repairs. Old homes tent to have more issues – so don’t be reckless, but you can make a calculated risk. Can you wave radon inspection? You can get a radon test after settlement and if there is elevated radon reading – you can have a remediation system installed for $800-$1,5000 – a small investment in the big scheme of things.
- If there is another offer on the table you will have to use an escalation clause. The escalation clause lets you increase your offer price by a certain increment above the next highest offer. You do set a limit of the highest price you are willing to offer. The questions is always – how much should I offer? We usually don’t know what the competition is offering, but I always tell my clients to think this way: If this property goes for $1 above this price – I don’t want this house any more. The seller does not have to honor the escalation clause and they can just counter at the highest price you offer – so there is risk in playing this game with your cards wide open, but the seller is in the driving seat and you can always say no.
- If your offer has a financing contingency – you will need a strong lender’s letter. Pick someone local, someone who is known and reputable. Internet lender’s letter won’t do you any good. You can change your lender once the contract is ratified.
These are the main steps in putting your best foot forward. You have to go item by items and see what you are willing to offer and give up and want you are not. If you do less than your best – you will have to live with many “what ifs”. So do it right. And if you do get the house you love – make sure to live there for a while, because real estate values goes up and down and in a few years your home might come down in value and it will go back up again. Regardless of the ups and downs you will live in a house that you love – and that’s living a good life.