If you’ve been looking for homes, or even just thinking about purchasing a home in the near future, you may need a little encouragement! Nashville’s real estate market is so hot right now that many buyers are feeling overwhelmed about the prospect of losing their potential dream home to another bidder who is quicker and has more money than they do. But even though we’re fully equipped to help you move into your new home, we aren’t experts at helping you find it.
This week, we’ve asked a more qualified guest blogger to give us (and you!) some advice on navigating Nashville’s real estate industry. Collyn Wainwright is a Realtor with Village Real Estate, and we work with her to support the local non-profit Tennessee Respite Coalition. Collyn is dedicated to helping her clients, friends, and community find the place that makes them feel most at home, whatever their circumstances. Thanks for your help, Collyn!
How to Win in a Multiple Offer Situation (It Isn’t ALWAYS Offer Price)
Nashville is a sellers’ market and it’s hard for buyers to win these days. For the past several years, the Nashville market has seen unprecedented growth, and as everyone has heard by now, the number of people moving to town does not match the amount of housing available in the price ranges needed. The most competitive area is what is considered the “first time home buyers’ market,” which is typically $150-$300k. Most homes at this price point which are located in an established neighborhood and in good condition will go into a multiple offer situation.
So what does that mean, and how does it affect my bid?
In multiple offers, the seller will need to evaluate each offer, and either set a deadline to review all of the offers at once, or take a “first come first served” approach. The former option is more common, as it allows more buyers time to view the property and submit an offer by a set deadline. When you are submitting a bid in this situation, the agent will tell prospective buyers and/or their agents to bring their “highest and best” by the deadline. That means, for a house listed at $160k, if you really want to offer $175k, but you actually submit an offer for $160k to see if you can negotiate, you might not get the opportunity to negotiate. A seller can only counter one offer at a time, so they will either accept or counter the best offer they have in hand, while the rest of the offers may well expire by the end of the day, making them null and void.
But what if I can’t offer much over the asking price?
There are several tactics you can use to make your offer more appealing to sellers without having to go above your budget.
Always make sure your agent is asking what is important to the seller. Align closing dates with the seller’s needs if possible. Does the seller want a quick close, or do they need more time? Make your offer match what the seller has indicated they want as best as you are able. Sometimes the seller may need to stay in the home 30 days after closing and rent back from the buyer. That might be more important to them than money over the asking price.
Other times, the seller won’t have time to make repairs, and an “as-is” offer with a pass/fail inspection contingency may make your bid shine. People who are handy can often benefit from agreeing to do repairs themselves instead of asking the seller to do them. I would NEVER suggest anyone buy a home without a professional inspection, but if the repairs required are minor and not of significant cost, this method can be a winning strategy. By completing an inspection, you can discover if there are major costly issues that will exceed your budget, so you do have the opportunity to terminate the contract and get a refund of your earnest money if you find out about the costly problems before the end of the inspection deadline.
What else can I do to look better in a multiple offer situation?
It’s not fair, but having a conventional loan is pretty important in these scenarios. Cash is king to sellers, but let’s be realistic–most buyers need financing, and conventional loans are second best to a cash offer. Government assisted loans like FHA, VA, THDA and USDA loans are a wonderful resource for first-time buyers and those without much cash for a down payment, but they take longer to close, and often require the seller to make repairs. Sadly, offers with this type of financing are usually moved to the bottom of the pile. This doesn’t mean you can’t utilize this type of financing to buy a home; it’s just not the best choice in a multiple offer situation. However, new construction lends itself well to these loans because they are less likely to need repairs!
Don’t ask for closing costs. If you can afford to pay your own closing costs, plan to do so in multiple offer situations. I’ve seen sellers turn down a higher offer from a buyer who asked the seller to cover closing costs in favor of a lower offer from a buyer who could pay for their own closing. Perhaps the sellers are worried the house won’t appraise, and if they have to lower the price, plus pay closing costs in addition to the lower offer, the seller can lose a lot of money.
Write a personal letter to the seller. I know it sounds cheesy and corny, but when the seller narrows it down to the three best offers, and one person has written about how great the home is and the life they want to build there…the personal note can put a buyer over the edge of the competition. Selling the home can be very emotional for a homeowner, and they feel better knowing it is getting passed on to someone who loves it as much as they did.
In the end, the best offer lines up with what is important to the seller.
The key takeaway here is, if you only have $x dollars over asking price to play with, putting that money towards an extra month of rent, repairs, closing costs, or title might be more appealing than just cash on top of the list price. Creativity can win!
Good luck out there!
If you’re looking for a great Realtor who can answer more of your home buying questions, you can contact Collyn through her website! And when you’re ready to move, give us a call or text at 615-248-6288 or visit us online for more information.