Pros and Cons of Trying to Win a Bidding War

war museum perspective army

Photo by Skitterphoto on Pexels.com

In recent months, there have been a lot of articles written about how to win a bidding war, but few articles that looked at the pros and cons of these methods.  All the articles have great tips for winning at any cost, but are there any downsides to some of these strategies?

After months of searching, it looks like you have found the one! Your forever home!  You know what you want to offer and you’re ready to go!  You make your offer.  But, all of a sudden, you find yourself in a bidding war!  What can you do to snag that home before someone else does?

It is a seller’s market; inventory is tight, home prices are continuing to increase and interest rates could go up at any time!

 

If you are convinced that now is the time for you to make your move first, try not to panic.  Next, look over the strategies below and plan accordingly:

  1. Work with a real estate professional who has a solid track record and strong relationships with other agents to get inside information to make the deal!

Pros:  The right realtor who is invested in the community in which the property is located might know more about the seller.  The seller could have hot buttons to which only a locally connected realtor could gain access. The right realtor might know the circumstances around why the property is hitting the market. Maybe it’s a job transfer and there is a specific date that the sellers need to be gone. You could tailor your offer to that time frame if you are able. The more information you have the better armed you are for battle! Also, a great realtor is a good negotiator no matter what inside information they have on the property.

Cons:  The only downside to working with a realtor is that they have to be compensated for their work.  Whether they do a fabulous job for you or the bare minimum you still have to pay the commission.  Or do you?  Most often the commission paid to your buyer agent is paid by the seller.  The seller agrees to sell his house and pay a commission.  That is customarily split between the buyer and seller agent.  The only time you would have to pay for you buyer agent is if there is no selling agent; most often found in For Sale by Owner properties.

  1. Get pre-qualified or Get pre-approved. Just make sure you Get with a lender! There is a lot of misunderstanding about what these letters mean based on what they are called. A pre-qualification is an estimate of how much money you can get from a lender based on a conversation you had AND an examination of income, credit and employment documentation. Usually, your lender will utilize an automated underwriting system as well which is a computer telling you everything looks good and meets the criteria for the loan program you are applying for.  Now a pre-approval is an amount for which you have tentatively been approved based on everything you need for the Pre-Qualification, but an actual underwriter has reviewed your loan application and documentation.  A Pre-approval is a stronger document and will give the seller more confidence in your ability to get financed.

Pros:  Having a true pre-approval will show that you are serious.  Based on the information you provided to your lender you are creditworthy and your bid should be strongly considered.

Cons:  If you are pre-approved for an amount that is lower than what the competitors bid you may need a new pre-approval.  Keep your lender on call.  You really have to know who you are going to use for your loan before you begin the bidding process because in this market you need to know for sure that barring unforeseen circumstances you can get the funding to purchase the home.

  1. Submit your bid with an offer to beat the highest bidder! In many cases, some offers now include an additional promise called an escalation clause to beat the highest bidder by a certain dollar amount. A seller in Laconia, NH recently received an offer saying the buyers will beat the highest offer by 5K. If your seller is strictly money oriented this might be the way to go! Many agents are not comfortable with escalation clauses, but the practice is certainly worth discussing with your agent.

Pros:  If you submit your offer with an escalation clause, you should be the highest bidder.

Cons:  If you submit your offer with an escalation clause and you already were the highest bidder, you might just out bid yourself!  Also consider that if the property is under the value of your offer, your lender will lend on the value or purchase price, whichever is lower!  You will be on the hook for anything above the value out of your pocket.

  1. Waive the Home Inspection(or offer to have a pre-home inspection) A home inspection is an important part of the home buying process, designed to help buyers learn up front any problems that require work or if there are necessary repairs that need to be made to the property.  If you have done your research on the property and feel confident that you can handle any major repairs that need to be done, then waiving the inspection could push your offer to the top of the pile.

Pros: The main advantage to taking this path is that you shorten to sales time and most sellers will love this.  There will be no waiting to schedule a home inspection and no haggling on the sales prices to try to get the homeowners to make repairs.  If you are dealing with a newer property the likelihood of problems is minimal.  Older homes have more “hidden” issues and should have a home inspection.

Cons:  Just remember that if you agree to do it, there is no turning back! You have given your chance of halting the sale due to a serious structural issue or termite infestation away upon making this agreement.  As long as you are in a position to deal with major repairs should they arise, this could be an option for you.

From a lending standpoint, water tests on wells and appraisal of value inspections usually cannot be waived and must be done.  We are seeing some approvals now that are waiving the appraisals with strong borrowers and good real estate areas.

If you are too nervous to go completely without an inspection, you might be able to set up a pre-inspection before you make the offer, but if there are 10 other offers with waived inspections this approach is not likely to work.

  1. Write a letter to the homeowners—In a hot area, you can set yourself apart from other buyers if your offer comes with a letter about why you are the best buyers for this home. If you go this route rely on your agent to guide you in structuring the letter.

Pros:  Often people have an emotional attachment to their homes and they might enjoy getting to know a little about the next inhabitants. Sellers might appreciate knowing that you will love and cherish their home in the same way they did. Talk about yourself and your family, why you love the house, provide some compliments to the seller in the process.

Cons:  This is a great idea if your lifestyle is in complete harmony with that of the sellers.  What if your idea of what you want to do with the home horrifies them?  It could go the other way. If you take this route, keep it simple and assure them their beloved home will be well maintained and cherished.

Of course, none of these tactics is 100% guaranteed to make you the winner in a bidding war.  The biggest tip we have? Know when to walk away. After all, no house is completely perfect, and if you don’t make this one yours, there’s sure to be another that catches your eye … maybe just around the corner.
(for publish in Laconia Daily Sun) 

 

Realtors—what you need to know to enhance your marketing strategies!

books tunnel school endless

Photo by Public Domain Pictures on Pexels.com

Realtors need to step up their marketing plans now more than ever!  According to an article on the website of the Florida Association of Realtors, “Real estate agents who think they’re doing a decent job at marketing should revisit their strategies to ensure they raise the bar from average to exceptional.”

The days of offering only MLS generated Comparative Market Analysis, (no matter how snappy the folder), is not enough.  Realtors need to have a digital marketing strategy for themselves, as well as, one that outlines how they will market for their customers.

 

Realtors have a dual marketing challenge:

 

  1. Presenting themselves as THE realtor to represent Buyers and Sellers in what could be the largest financial transaction they ever make
  2. Showing they are experts at marketing listings to sell fast and for the highest price

 

 

Most consumers are using social media for home searches and to view open house listings.  They are also checking out realtor review sites, website bios, and social media accounts to learn more about YOU.  How does your digital profile match up to your competitors?

 

Technology and social media are the new normal for realtors.  High-level marketing strategies like single-property websites, social media, content marketing, blogging and video that goes beyond virtual tours needs to be strongly promoted.  Are you using drone technology?  What other innovative things are you doing?

 

If you have strategic partnerships with local lenders, explain how those relationships might help them in the home buying process.

 

The new products and services for marketing, lead capture, lead generation, list building, lead conversion and more are never ending.  Don’t be afraid to partner with a content writer or social media manager to take care of the things that can be overwhelming.

business close up commerce computer

Photo by Pixabay on Pexels.com

At MK3 Content, we specialize in real estate content marketing. We can write website content, Bios, blog posts, property descriptions, open house flyers, social media posts and more.

 

Ask us about our realtor start up packages.

Our Money: How to wade into the daunting waters of flood insurance — peoples trust toronto

https://ift.tt/2ApJwwM July 31, 2018 By Beth Pinsker NEW YORK (Reuters) – Donna Childs recently bought a home in Rhode Island about 5 minutes from the Pocasset River, and, despite past flooding, everyone told her she did not need flood insurance. As a risk management expert, she knew better. “I’m far from the water, but basically […]

via Our Money: How to wade into the daunting waters of flood insurance — peoples trust toronto

Email Marketing Tips to Increase Your User Engagement — Jetpack — Your all-in-one WordPress plugin for design, marketing, and security

Every website has a purpose. Whether your site is for a family-owned bakery, a woodworking shop, or even a personal blog, it can benefit from attracting repeat visitors and increasing user engagement. Partaking in email marketing initiatives (sending electronic messages to site visitors via email) is one of the best ways to do this, as […]

via Email Marketing Tips to Increase Your User Engagement — Jetpack — Your all-in-one WordPress plugin for design, marketing, and security

Why We Love First-Time Home Buyers!!

 

art artistic bright color

Photo by Pixabay on Pexels.com

First-Time home buyers might take a little extra work, but we love them! By the time they get to a realtor, they have received all kinds of inaccurate advice.   Everyone from Aunt Edna to the guy at the bank whose wife used to be a realtor has offered their two cents.  This can be frustrating, but it also gives you the opportunity to be the hero and correct all the bad advice they have been given.  You have suddenly been put in the position of being the trusted expert.

So what should you tell them?  Here is a list of the things we think first-time home buyers need to know:

1. “You don’t know what you can afford until you meet with a loan officer.” First-time home buyers often over-estimate or under-estimate how much home they can afford.  So many factors go into determining the loan amount for which they qualify that they really need to meet with a mortgage professional before they go house shopping.

2.  “You don’t need to have the house before you meet with a mortgage lender.” This is true! Many first-time home buyers think they need to have the property address before meeting with a mortgage lender.  They do not need a property address to establish credit worthiness.

3.  “You do need to be pre-qualified for your mortgage.”  In the super competitive real estate market today, they are truly at a disadvantage if they go into a property negotiation without a pre-qualification.  A true pre-qualification means an examination of your income and asset documentation, as well as, your merged credit report.

4. “You need to pay attention to market conditions.” Market conditions affect property values and mortgage rates.  Don’t be afraid to act fast or wait it out depending on what is happening.  Buyers should be thinking long-term and not just about getting into the home as soon as possible.

5. “You need to look at the home inspection closely.” There has been a trend in the market place to waive home inspections.  We don’t recommend this unless buyers have money to burn.  If they uncover a big problem down the road, they will have no recourse. They may win the bidding battle, but ultimately lose the war.

As a realtor, you get to be the hero and get them into their first home.  That can be very rewarding in many ways. There really is no replacing a professional realtor when you are a  first-time home buyer!

Top 5 things Realtors and Mortgage Loan Officers can do to grow their referral networks!

Air plants

To be profitable in many industries you need to have a great referral network. A continual source business that comes from “word of mouth” and positive experiences is invaluable in this highly competitive field. Referrals are still the primary way realtors and loan officers their get business.

There are some basic things you can do to make sure your customer thinks of you when looking for their next home, investment property or vacation home.

So what is that you ask? You have to be committed to what you do and in it for the long haul. There are many people that work in both of these fields on a part-time basis as well, but when you are working on behalf of a client your dedication level has to be full time! If not, they will choose someone else when it comes time to sell again or buy a new property.

Remember why you got into this business! One of the main reasons cited by most people who get into real estate is that they like working with people, according to a study done by Brightwood Real Estate Education Centers. Some folks are better suited to be in front of a computer all day, but not a realtor!

Are you a problem solver? Realtors and Mortgage Loan Officers need to be able to think fast, and sometimes think outside the box to be competitive in today’s environment.

When you run your own book of business your schedule can be flexible, but to be a realtor or loan officer that gets repeat business, your schedule needs to accommodate the customer.   If that means texting or emailing them at 10:00pm then that is what you have to do! You have to be available to them all the time.

You have to be an empathetic person to do well in the housing industry and to get repeat business. According to a study by Vivo Property Buyers in the UK, buying and selling a home is the most stressful life event. Their survey determined the process to be more stressful than having a baby, getting a divorce, or starting a new job. Don’t get jaded by the process and remember to put yourself in the client’s shoes.

The housing industry can be exciting and lucrative field if you build a strong referral network. Always, putting the needs of the customer first will help you achieve this basic goal!

How To Write Better Blog Posts: 10 Rules For Writing Engaging Blog Posts People Will Actually Read — Beautiful, Creative, Inspiring . . . Life.

Hello, internet buddies – today I’m going to be back spilling the tea about blogging. Namely, the part of it we all seem to sometimes kind of hate – the actual blog-post-creating part. I get it, I do. Writing a good blog post is hard. It’s time consuming, it’s elusive and sometimes it feels like […]

via How To Write Better Blog Posts: 10 Rules For Writing Engaging Blog Posts People Will Actually Read — Beautiful, Creative, Inspiring . . . Life.