Tips for a Making Your Best Offer in "Highest & Best" & "Multiple Offer" Situations!

Many of our buyers are experiencing "highest and best" situations where a property has received mutliple offers and the seller has asked all interested parties to submit their very best offer. We've written about this before on our blog, but wanted to write about it again since it's becoming the "norm" around here.

If you're in a multiple offer situation and are wondering how you should even begin in making your best offer, here are few tips to remember:

"Highest & Best" doesn't just mean sales price. Just because you offer the highest sales price doesn't ALWAYS make you the best offer. There are other terms that you should consider when making your offer ...

• Financing
• the seller may consider what type of financing you're pursuing. Are you paying cash? They say "cash is king,"  ya know. Conventional vs FHA vs USDA, etc.
• Pre-qualified vs Pre-approved?
• If you're in highest & best situation, don't even think about trying to get away with submitting an offer without a pre-qual. Sellers don't want to risk giving up other buyers for someone that can't show that they have at least talked to a lender and can obtain a loan. If you really want to increase your chances of winning a property, try to obtain a pre-approval letter if time allows. The difference you ask? Generally, a pre-qual letter is typically issued after the lender checks your credit and uses information that you verbally provided to qualify you for the loan. A pre-approval letter is issued once a lender has received documentation supporting the information that you provided. If you have a pre-approval, it can make a seller feel more confident in your ability to obtain a loan and close on their property.
• Find out if the seller or the listing agent has a particular lender that they know and trust. If so, perhaps it's in your best interest to also get pre-qualified with that lender, even if you have no intention of using them. There are a lot of bad lenders out there that allow deals to fall apart just days before the closing date. Sometimes a pre-qualification letter isn't worth the paper it's written on and so banking on a financed contract is somewhat of a gamble; however, if the seller/listing agent trusts a lender's opinion and you obtain a pre-qualification letter (or better yet, pre-approval letter) through that lender, they'll likely feel really confident in your financing. Brownie points, it goes a long way.
• Contingencies:
• There are many contingency types -- financing, appraisal, inspection, etc. In each scenario, having such a contingency would give you as the buyer the option to terminate the contract for a certain period of time and in certain situations. The "best" offer is obviously NOT the one that provides a buyer with nine different ways to back out without penalty. To a seller, this seems as if the buyer isn't fully committed. While some contingencies are necessary, try to limit the contingency time periods as much as possible.
• Closing Date:
• As simple as this sounds, it matters to sellers. Try to find out from the listing agent what the seller's situation is. Are they really anxious to get the property sold or are they hoping for an extended closing period so that their children can finish the school year? Use this info in making your offer. It's a small detail, but if you can write a strong offer AND meet the seller's needs, you're winning points.
• Seller Paid Closing Costs:
• You may need or want assistance with closing costs and that's okay; however, DO remember that it all factors into who has the "highest and best" offer. For example, if you offer full price on a home of interest but ask the seller to pay 4% towards your closing costs while another buyer offers full price with only 2% in closing costs -- well, it's obvious which one would be the best.
• Bad Strategies:
• We're seeing many buyers/agents submitting offers that are WAY above the asking price. Buyers are doing this, likely on the ill-advice of their agents, because they are obtaining financing and they know that their ridiculous offer amount will surely make them the "best" offer, all the while knowing that the home will never appraise at this high amount. If it will not appraise when the appraisal is completed, the buyer cannot obtain the loan and they will then ask the seller for a price reduction on the basis that the home didn't appraise. This allows them to "win" the offer up front by being way above the other offers on the table, knowing they will ask for a price reduction later because the house will not appraise for their inflated offer price.
  
  BAD IDEA! I'm sure somewhere, some place it has worked, but most agents aren't that stupid and this can really offend a seller. If you're a seller, watch out for this tactic! Don't dream of obtaining that high offer price unless it's realistic. Buyers, play smart, but not dirty.
• Price:
• While it's not the ONLY factor, it's definitely one of the most important terms... probably the MOST important. In our local market, most highest & best situations end with many offers (one listing that I showed the other day had 20+....crazy!) and these offers tend to be full price or higher. Make a wise decision based on your budget and the comps, but come in strong; especially if you REALLLLLY like the property. Lowballing in a highest & best scenario just won't cut it.

Hopefully these tips will help you in drafting your best offer for your dream home, but do remember, every property is different and every seller is different. One may care about certain aspects of an offer while others care about different ones. Some banks don't care about anything but the numbers (show them the $$!). Look to your Realtor for advice!

 

Myths - The Earth is Flat and Newspapers Sell Houses

It is amazing how masses of people can believe something that is absolutely untrue. The greatest example of this is that at one time the vast majority of people believed the world to be flat. Today, we want to debunk another commonly held belief – that newspapers sell houses. Somehow this notion gained believability even though the facts consistently prove it to not be true.

When you are selling your house, you should know what methods perspective purchasers use to find the home of their dreams. That would enable you to develop the best marketing strategy to attract a buyer.

Google recently teamed with the National Association of Realtors (NAR) on a new report, The Digital House Hunt: Consumer and Market Trends in Real Estate. Let’s look at the actual search habits of today’s buyers revealed by the report:

• 90% of buyers now begin their search for a home online
• Real estate related searches on Google.com have grown 253% over the past 4 years

Of the 90% who use the internet, they gain information from these sources (with percentages):

• The internet – 100%
• A real estate agent – 89%  
• A yard sign – 53
• An open house – 46% 
• Print newspaper – 28%

If you want to develop a great marketing strategy giving your house maximum exposure, forget newspapers. Less than 30% of buyers will ever see your home. Instead, look toward the internet and a real estate agent.

Where on the internet should you advertise your home? The buyer is attracted to the type of sites that have the greatest number of listings. These sites are normally generated by the real estate industry. You should make sure your home is on as many of these sites as possible. That will give you the best chance of attracting your buyer.

Bottom Line

Print media never was a great way to market a house for sale and its effectiveness is diminishing each year. Meet with a local real estate professional and put together an internet marketing strategy worthy of your home.

The Stephens & Stephens Input

Most of the buyers we work with are signed up on multiple real estate related websites that allow them to search for homes. The internet is definitely the #1 way that buyers search for homes. For our seller, we know which sites drive the most traffic. We strive to gain full exposure on these sites; this means we add multiple photos, virtual showings, expanded story-like text to detail your home, and much more. There are thousands of homes on the internet and we strive to make our listings stand out.

If you’re a buyer looking for a home and want to be signed up to receive free listings every day that meet your criteria, give us a call or send us an email. It’s important to receive the new listings as they hit the market so you can be one of the first to know about them. The market is hot right now and if you don’t make an offer early then you may never get the chance to.

If you’re a seller and looking for maximum marketing exposure, give us a call or send us an email! We strive to make our listings stand out against the competition. If you’re already listed, be sure that your home appears with multiple photos (and good ones at that). Some agents don’t take the time to take good photos or film virtual tours/showings, which really tell the story of your home to a buyer. There will definitely be missed opportunities if you're not on the right internet sites or are lacking good marketing details (photos/virtual showings/good text, etc).

Happy Internet Searching!

Article Above Courtesy of KCM Blog - Steve Harney
(With the exception of "The Stephens & Stephens Input")

How to Use Pinterest & Houzz for Your Home Remodeling & Decorating Needs

PINTEREST 

Rebekah and I have been followers of Pinterest for some time now. If you don't know what Pinterest is, it's a social networking site that allows you review the "pins" of others and "pin" ideas you like to an online bulletin board. The pins are photos or articles that have been "pinned" by others to this online bulletin board. They can be about virtually anything. Decor, landscaping, recipes, funny quotes, you name it. To make it easier to review, you can search by category or key words for things that interest you.

For example, if I wanted inspiration for bathroom decor or a bathroom renovation I could search "bathrooms" on the site and it would pull up more "pins" than I can look at in one day. Further, if I see something that I like, I can "re-pin" the piece to my online board. Your board of pins is always there for you to come back to and review.

Another great source of ideas is Houzz. The headliner on their site is "Create an Ideabook for your next remodeling project." Unlike Pinterest, this site is dedicated strictly to house renovations & decor. There are millions of photos from designers of homes, rooms, interiors, and exteriors. If you see one that you like, you place it in your "Ideabook" and you can review it at any time by logging in and going to your "Ideabook." Houzz also allows you to search for area contractors and designers. This site is fabulous.


So what do these things have to do with Real Estate you say?

Both of these sites are great sources for remodeling projects, decorating, staging, or just adding some simple curb appeal. Both Pinterest and Houzz have mobile apps for your IPhone or IPad as well.

For our homeowners or sellers, we invite you to explore these sites to gain ideas on decor, staging, and curb appeal. If you're planning a remodel, there's tons of inspiration. If you've lived in your home, but haven't really worried too much about the the decor and just want to spruce it up for showings there are many ideas. Here's a few we found:

                                        



If you want your house to smell heavenly, boil some orange peels with a 1/2 teaspoon of cinnamon on medium heat. My favorite smell in the entire universe!

For our buyers, buying a new home is such a wonderful experience, but decorating and furnishing it can be overwhelming if you don't have anywhere to start with ideas. If you're on a budget, there's also some inventive and cool do-it-yourself furniture pieces and decor that look great! There's even ideas on how to makeover your existing furniture. You could even hit up the thrift shop for pieces and completely re-do them. Here's some ideas of what you can find:

And guys...men...boys....don't be afraid to tap into these sources. If I hear another man say that Pinterest or Houzz is for girls I'll scream! After all, I'm pretty sure you get called in to paint, remodel, or landscape from time to time. Why not be a part of the design? In fact, after your wife/girlfriend or partner starts to peruse these sites I'm sure your "honey-do" list will explode!

Happy Pinning!

Sell Your Home Today - Part 3 of 3

Part III - New Construction will Soon be Your Competition  

 Over the last several years, most homeowners selling their home did not have to compete with a new construction project around the block. As the market is recovering, more and more builders are jumping back in. As an example, the National Association of Realtors revealed, relative to last year, year-to-date new home sales are up 19%.

These ‘shiny’ new homes will again become competition as they can be an attractive alternative to many of today’s home purchasers.

Here are the numbers regarding new construction about to come to market from the Census Bureau:

BUILDING PERMITS

·         Single-family authorizations in February were at a rate of 600,000.

                This is 25.5% above February 2012.

HOUSING UNDER CONSTRUCTION

·         Single-family housing starts in February were at a rate of 618,000.

                 This is 18.5% above February 2012.

HOUSING COMPLETIONS

·         Single-family housing completions in February were at a rate of 574,000.

                 This is 32.9% above February 2012.

As we mentioned, new construction can be strong competition to a seller of an existing home. It may make sense to list your home before this new inventory makes its way to market.

The Stephens & Stephens Recap: This three part series posted over the last three days was written by the KCM Group & Steve Harney, our trusted advisors to the real estate market that we follow religiously. We posted this series because it is exactly what we are experiencing in the Metro Atlanta market: strong buyer demand for housing, low inventory levels, and new construction on the rise. These three things have created an interesting market over the last three months. Basically, we are in the middle of a "frenzy" as Rebekah & I call it.

When a home hits the market, if it's priced well and shows well, we are typically seeing it go "under contract" within the first 30 days on the market (our last two listings have gone under contract within the first 48 hours). 

With inventory levels low, meaning there aren't enough homes on the market for buyers to choose from, many homes end up with multiple offers on them. This creates a great situation for the seller; more than one offer to choose from and typically a great sales price. 

For the buyers, it can be frustrating and upsetting when competing with other offers. Because there are multiple offers being made, many buyers choose to increase their offer price, even going above the list price at times (see our post from last week "Should I Increase My Offer"). This creates a fabulous sales price for the seller. In addition, the increased prices buyers are offering is creating appreciation in many communities. Some communities are seeing $10,000-$15,000 appreciation rates in just 30 days when just one or two homes sell at higher prices. 

Bottom line, it's a great time to try to sell your home! All three factors discussed in this series are reasons why we believe now is the time to sell! Buyer demand is strong, inventory levels are low, and new construction is on the rise. Call or email today if you'd like to discuss placing your home on the market or if you have questions. Thanks for reading!

 

Sell Your Home Now - Part 2 of 3

Part II - Inventory Levels are Low

A seller’s ability to sell their home in today’s real estate market will be determined by both the supply of homes for sale and the demand for that housing. In real estate, supply is represented by the current month’s supply of homes for sale (the number of homes for sale divided by the number of homes sold in the previous month).

While there is no steadfast rule that will apply to pricing in every category of housing, here is a great guideline:

·         1-4 months’ supply creates a sellers’ market where there are not enough homes to satisfy buyer demand. Appreciation is guaranteed.

·         5-6 months’ supply creates a balanced market. Historically home values appreciate at a rate a little greater than inflation.

·         7-8 months’ supply creates a buyers’ market where the number of homes for sale exceeds the demand. Depreciation follows.

What is happening across the country right now?

In most parts of the country, supply is dropping like a rock. According to the National Association of Realtors, total housing inventory is below a five months’ supply. This is almost 20% below inventory numbers of just a year ago and at levels we haven’t seen since 2005.

Based on the table above, we can see that the supply/demand ratio is showing a sellers’ market where prices appreciate. This has created positive movement in housing values in most parts of the country.

Sellers have a great opportunity right now. Historically, inventory increases dramatically as we approach summer. Selling now while demand is high and supply is low may garner you your best price.

Tomorrow, we will look at the competition new construction will create. New construction is your competition of the future.

The above article was written by KCM Group - Steve Harney

Sell Your Home Now - Part 1 of 3

 

Today's post is part of a three series article as to why you should sell your home now. We couldn't agree more! In fact, every home we have listed in the last two months has gone under contract within the first 30 days of being on the market. Our latest listing was listed last Thursday and under contract on Friday morning. The market is doing something phenomenal now and I'm going to venture out on a limb and say that it appears our market is headed towards recovery...not a quick and fast recovery to the market of the mid 2000's, but a much better market than we've seen!

Now, we're not trying to fill you full of false hope if you have a home to sell. If you need to sell, you'll need to be priced competitively and your home will need to show well. If you can make these two things happen, combined with our marketing power and knowledge, we're sure you'll be able to sell your home. We'd love to help you!

Part I - Demand for Real Estate is Much Stronger This Year!

When selling anything, owners can only hope there is a strong demand for that which they are selling. The great news for today’s home sellers is that the current housing market is experiencing a stronger demand than we have seen in some time.

The spring housing market of 2013 is projected to be one of the best in years.

Home Sales

The National Association of Realtors (NAR) reports monthly on both pending sales (houses going into contract) and existing home sales (actual closed sales).

In the first quarter of 2013, pending sales have consistently outperformed the numbers reported in 2012. Contract activity has been above year-ago levels for the past 22 months. Before this year, the last time the index showed a higher reading was in April 2010, shortly before the deadline for the home buyer tax credit.

NAR also revealed that closed home sales have been above year-ago levels for 20 consecutive months and sales are at the highest level since the tax credit period of 2009-2010.

Impact on Sellers

This increase in demand has created bidding wars for properly priced homes across the country. This has resulted in two favorable changes for home sellers:

1. They are receiving offers closer to (if not greater than) the list price.
2. The average days it takes to sell a home has dropped by over 20% from last year.

If you are thinking about selling your home, don’t miss out on the strong demand that exists in the current spring market.

Tomorrow, we will look at the supply of housing inventory that is available. 

Homes Are Still "On Sale"

When Compared to 2007 Pricing, Homes Across the Nation are Still "On Sale."

See the below infographic provided by our friends over at the KCM Group/Steve Harney:

So...what does this mean for Atlanta? Prices are still down approximately -33.3% compared to home values in 2007. Nationwide, home prices are still down approximately -27.5% when compared to home values in 2007. It's a great time to buy! But you better hurry! I see some "green" on that map, meaning prices in some cities nationwide are actually up when compared to the 2007 values.

Atlanta was one of the worst hit markets in the nation and will take longer to recover, but if you buy now we can assure you that you will get a better deal today than in 6-12 months because we are appreciating! If you need to sell, get your home on the market now and be a part of the "frenzy" of buying that is taking place. Inventory levels are low, meaning buyers don't have enough to look at, and there are often multiple offers on the table. This is contributing to the appreciating prices. Take advantage of the appreciation. In addition, it's the spring/summer market; it's the best time to sell! We know a good Realtor who can help you buy or sell...hint hint...us!

Should You Increase Your Offer on a Home? Should You Bid Over the Asking Price of the Home? Highest & Best - Multiple Offers - Oh My!

Housing inventory is at an all time low in the Metro Atlanta area. Six months of inventory or less is a "healthy market." In Metro Atlanta, most counties are running somewhere between a 2-3 months inventory. That says it all!

It's tough to advise clients in this market. We don't want them to feel as though we're being pushy when we tell them to make a strong offer, to increase their offer, or to even overbid the asking price. Rarely has our market seen overbidding, but now it's common. With the lack of inventory and the higher demand of buyers you can bet that if you are interested in a home at least a few other buyers are as well.

There was an article published recently by the KCM Group that we follow. They are trusted real estate advisors and they talk about the issue of low inventory and making offers exactly the way we are experiencing the Atlanta market. Read their article below:

Should Your Buyers Increase Their Offer? Posted: 28 Mar 2013 04:00 AM PDT

Limited inventory and a very strong demand for housing has created an environment where bidding wars are commonplace in today’s real estate market. Homes priced properly are getting multiple offers within a short time of coming to market. This brings about a dilemma for the agent: How should they advise their client who is about to make an offer when other offers will also be presented?

Over the last several years, there wasn’t any pressure on the buyer to adjust their offer for three reasons:

1. There were plenty of homes for sale
2. Prices were falling
3. Mortgage interest rates were falling

The buyer could find another home easily for probably less money and a lower mortgage rate. There was no downside to not ‘upping the ante’. However, in today’s market, things have dramatically changed.

HOUSING INVENTORY

A normal real estate market has between 5-6 months worth of inventory. Over the last several years, the inventory of homes for sale had skyrocketed to 10 months. Most buyers in almost any price range had a multitude of houses to choose from. Today, the national month’s supply of inventory has fallen below five months. In many markets, there is not enough housing inventory to satisfy the current demand.

Conclusion: If the buyer loses the house they are bidding on, there is no guarantee they will find a similar home anytime soon.

HOME PRICES

Because of the limited inventory, home prices are again appreciating. The Case Shiller Pricing Index revealed that house prices rose by 6.8% in 2012. Experts are projecting home prices to increase by 5% to 8% in 2013.

Conclusion: If the buyer doesn’t get this house, there is a good likelihood that a similar home will cost more in the future.

MORTGAGE RATES

The ‘cost’ of a home to a buyer is determined by the price of the house and the expense associated with the financing. Mortgage rates are projected to inch up in 2013. In a recent forecast, the Mortgage Bankers Association predicted that rates could climb as high as 4.3% by the end of the year.

Conclusion: If interest rates do inch up, the ‘cost’ of the next home could be impacted significantly.

Bottom Line

If a buyer truly loves the house they are bidding on, it probably makes sense to raise their bid now instead of waiting for another dream house to appear.