How Do I Compete?
Last year, we had over 100 new agents join Hometown. Last year I had quite a lot of activity, even during the pandemic. This year is proving a little wonky. The pandemic has brought out people wanting to be Agents because, let’s face it, a lot of us were reevaluating our career choices. Fair enough. Now, that being said, we are also dealing with a very HOT Seller’s Market. People keep asking me, “How’s the market?” All I can do is reply shaking my head in wonder and immediately jumping to, “Why? You want to sell?!” as I paw a pant leg and wag my tail excitedly.
I’ve gone into Real Estate with the sole intention of getting people what they want and doing it the right way. Yes, I also got into it because of the expedited paycheck, but that aside, I really do work hard to give the best service I can to my clients. What I’m not going to do is lie to my clients, nor will I steer them in a way I feel is not going to benefit them, even if they don’t want to hear it. We have a super competitive market right now and I’m seeing two things: 1. First Time Homebuyers crying on my shoulder at how many lost bids they’ve received and 2. Buyers throwing their hands in the air saying, “I’m done, I don’t want to buy a house like this.” If you’ve looked on your Next Door and neighborhood Facebook pages, you’ll notice the minute someone uses the words, “house” , “buy”, or “sell” in their posts, every Realtor® on the planet is answering. We are vultures to put it simply and we are competing for not only buyers, but we are looking for more inventory.
I lost three bids in one weekend and lost my buyers along with it. It’s difficult because, for one, I’m not going to tell people they shouldn’t get an inspection. I’m also not going to advise them to bid over listing if it’s not worth it. What’s going to happen in 3-5 years when you want to sell? Are you going to make anything off what you paid during this time. We are seeing the craziest things during this market from waived appraisals to up to $100K over asking. So what do you do to compete? Here are some tips:
CASH IS KING. If you’ve got cash to buy a home, I suggest you use it. Nearly every time it wins out on bids. Why’s it best? It eliminates lender fees and closing costs, it is also better for the seller because a buyer can’t back out due to financial hiccups.
GET PRE-APPROVED. Before I work with buyers I usually like them to get pre-approved before seeing homes. This gets the buyer prepared to make an offer easily. If you and I are going to see houses, I’ve already set you up and am ready to write contracts immediately if you give the word “GO!” Also, make sure you are choosing a good lender as well because even though you’re a first time homebuyer, you might qualify for a heartier loan.
BRING YOUR BIGGEST AND BEST OFFER. Don’t under bid. Always go higher. If you can stick an escalation clause in there, have your agent do so. Bring a bigger EMD, if $1000 is the deposit amount, double it, you have to pay it anyway at closing and it’ll help your bid. Don’t make special requests and if it’s a newer property or a condo, you can feel more comfortable about waiving inspections. Your agent should be able to advise you on amounts and negotiate a good deal.
TIME IS OF THE ESSENCE. This is key when entering into this market. If you see something and want it, jump on it immediately. Be prepared to write a letter of interest along with your proof of funds, and a solid offer. I’ve seen a house go on and within 24 hours there’s been 36 offers. You want to be the first and foremost! I’ve also seen buyers sit too long and they lose out. So, be prepared to write an offer quickly.
THE AGENT. Make sure you pick an agent with good negotiating skills. Make sure they are prepared and also communicative. Also pick someone who is going to be honest about pricing. Some agents just want the higher commission while others want to negotiate the best deal that in the long run won’t leave you stuck with an overpriced home.
THE BIGGEST DOESN’T ISN’T NECESSARILY THE BRIGHTEST. Sometimes it isn’t the biggest bid that wins, sometimes it’s something as easy as a shorter timeline to closing or agreeing to waive a certain amount in inspection items.
GET OVER IT QUCKLY. Yes, I know it had everything you wanted, but you lost. You lost to a cash offer with waived inspection that was 50K over asking. You couldn’t do that. It wasn’t in your power and so you have to accept the loss and move on. Trust me, it sucks for me just as bad as you because I also feel discouraged. You can only do what you can do financially and I can only give what I can based on my expertise and negotiation skills. Don’t worry, there’s another home for you and we’ll get it!
RISKY BUSINESS. Just remember if you are waiving inspections and appraisals, you may win the bid but in the long run be stuck with costlier problems.
I’m always going to do what you ask me to do, but part of my job is protecting you. I don’t want you to lose out on your dream house and I surely don’t want to lose out on a nice commission, but I also want what’s best for you and sometimes that means NOT taking a riskier route when it comes to your funds vs your desires. This isn’t going to last forever and I don’t have a crystal ball unfortunately, but I want you to go into the market with confidence and knowledge. So, you ready?