You Want To Offer WHAT?

This very unappealing house in a very appealing location is being sold for more money than it is probably worth.

Let your REALTOR® assist you with making a strong offer in this confusing market.

The housing market has been a huge topic of conversation for many people these days. We have all heard how “crazy” it is right now if you are trying to buy a house. And, most likely, everything you are hearing is true. In the present market, it is very rare to see an offer below asking price, buyers asking for the seller to pay some/all of the closing costs, and buyers asking for the seller to provide extras (home warranty, repairs that are not mandated by the lender, etc). Due to the housing inventory shortage, you must be as aggressive as possible in your offer because almost all homes are experiencing a multiple-offer situation.

For example, we just contracted the house pictured above in Atlanta. This home is in terrible shape - renters have ruined the interior. We advised the seller to sell the home as-is instead of putting money into fixing it up since it needs to be completely gutted, and she did not have the funds to do a renovation. The house (two bedroom, one bath, less than 1,500 square feet, 1/3 acre lot) was listed for $115,000. A year and a half ago this would have been a ridiculous price for this house! After several offers, we are now under contract for $138,000 cash with the buyer paying all closing costs.

This example is representative of most (not all) housing transactions in 2021. Our advice for all homebuyers: be ready to offer your absolute highest and best. In years past the asking price was considered a “starting point.” The buyer could offer considerably less, and negotiations would ensue from there. These days, that is simply not the case even though some buyers want it to still be true. We have had a few buyers get frustrated with us because we have advised a higher number than they really wanted to offer. This advice is not because we are trying to make more money; it is because as professionals, we know what it takes for our clients to win a contract.

Usually, an informed buyer understands that he/she needs to offer no less than the asking price and offer to pay all closing costs. This could mean using more of your savings to contribute to closing costs and switching from a conventional loan to FHA. Your lender will present different options in order for you to be able to the strongest offer possible. If you are a first-time homebuyer, our best advice is for you to be building up your savings in order to be able to make an offer that allows you to assist with closing costs, pay a higher earnest money amount, and possibly be willing to pay cash over the appraisal price. Most importantly, LISTEN TO YOUR REALTOR’S ADVICE!