Some Home Buying Tips That Will Give You an Edge in today’s competitive market.
It’s not a buyer’s market these days; there are still plenty with cash, and financing has brought in a whole new set of hungry home hunters. According to CoreLogic, cash sales make up one third of total homes sales. Competition in key popular locations is even greater. “Cash purchases account for nearly half or more of all transactions in cities such as New York, Miami and Los Angeles”, says appraiser Jonathan Miller of Miller Samuel.
In Miami, the number of foreign buyers looking to purchase real estate is up 40 percent over last year, with 81 percent paying all-cash, says the Miami Association of Realtors. If you’re looking to buy that dream property, you could quickly find yourself in a horse race against global buyers who are willing and able to pay cash. So how do you get an edge on the competition?
1. Move fast
When buying a home, time is of the essence. Cash buyers show strength because they present no financial contingency. But a solid mortgage pre-approval with a short inspection and the assurance of a quick closing can have equal billing. “Cash is important but it means nothing if the buyer doesn’t act fast, “Bottom line is, a seller wants to know how quickly they can get their money,” says Susan Smith of Hilton and Hyland in Beverly Hills.
2. Exceed the ask
“In most cases the strongest buyers are cash buyers,” says Smith. However, adds Frances Katzen of Douglas Elliman in New York City, “buyers who present an offer considerably above the asking price may find that the seller is much more willing to give them some time to get their financing in order.” Another approach is to show, along with the loan pre-approval, proof of the funds necessary to cover the down payment. Katzen notes that a seller will be more inclined to accept an offer with a financing contingency when the buyer demonstrates sufficient liquidity.
3. Establish a connection
Selling a home can be a sensitive matter, and in some cases sellers are concerned about the intent of the buyer. According to Smith, if the seller has an emotional connection to the property, the owner may favor a buyer who plans to occupy the property over an investor who plans to make major changes and rent or re-sell the property.
4. Show kindness
Leonard Steinberg, President of Compass, a real estate brokerage firm headquartered in New York City, observes that in a sea of self-absorbed, cash-rich people, those who show kindness toward the seller seem to separate themselves and gain an advantage. Paying compliment to the space you are buying never hurts. Buyers are quick to point out a property’s shortcomings, and this almost always backfires. Instead, take advantage of any opportunity you may have to convince the seller that you are the right buyer for their property.
5. Be flexible
Steinberg believes that offering flexible terms and even allowing the current owners to stay after closing (sometimes rent-free) can seal the deal. Katzen also points out that sometimes a seller needs time to get their affairs in order. Your willingness to be accommodating (in certain circumstances) can be more appealing than cash, and in these instances, an offer of a quick closing may be viewed by the seller as a negative.
Vanessa Grout/Forbes Magazine