All indicators point to healthy real estate sales in 2013. Lawrence Yun, National Association of Realtors chief economist, said the median sales price for homes across the country was up 10.1 percent year over year in November, and that we had enjoyed nine consecutive months of year over year increases. We are certainly experiencing increases in price and sales here in San Francisco.
So, as a buyer, what are the six things you can do to improve your chances of making a successful bid to purchase your new home in this increasingly competitive real estate market?
- Make sure you have taken a good look at the property. This would include, ideally, more than one visit to the home and preinspections if time allows. Why spend the money on preinspections? Chances are if you love it, others do, too. Offers made after preinspections are cleaner and enable you to waive future inspections. The listing agent and the seller know that you will not likely be coming back for further negotiations down the line, and that makes your offer more attractive. It also helps you know as much as you can in advance about the physical condition of the home.
- Get preapproved, and not just prequalified. What is this and what is the difference? Though there are quite a few all cash offers these days, most buyers borrow a portion of the cost of the home. If financing will play a part in your purchase, then be sure your lender has fully preapproved you. That means completing a full loan application, running a credit check, confirming your income, reviewing your tax returns, and fully preapproving you for the purchase loan you are requesting. Once this is all in place, you’re all set, assuming the home appraises for the purchase price. In contrast, prequalification is given after simply having a conversation with the lender. It doesn’t involve full processing and so it doesn’t really carry any weight anymore.
- Know the value of the property you want to buy. The more homes you have seen in a given neighborhood, the better. Looking at comparable homes on paper or online is very helpful — you’ll want to track the final sale price of homes in the neighborhood for sure — but seeing as many properties as possible in person will help you better understand why some homes sold higher or lower than others. Visit open homes on Sundays, or tour properties with your real estate agent.
- When you are ready to make an offer on a home, be sure to get the disclosure package in advance and read it. Have your real estate agent get answers to any questions you may have after reading it. This will also give you a leg up by being in a position to approve the package when you submit your offer. This tells the seller you have studied the home and know all there is to know about it up to this point. It helps convince the seller that you are a serious buyer.
- Write a letter to the seller. Yes, it does help! Take the time to write a letter to the seller explaining why you like the home and how you can see yourself living there. Most sellers have an emotional attachment to their property and want to know that the new owner will love it, too. I have seen offers get accepted over the years that weren’t necessarily the highest bid, but something about the letter resonated with the seller and that offer was chosen.
- Take advantage of your real estate agent’s expertise. Whether it happens to be a multiple offer situation or not, talk with your Realtor about how much you should offer. Ask your real estate agent to call the listing agent to see what things are important to the seller. These might be a particular closing date, an ability to stay in the home for a bit after the close of escrow, or some other request or stipulation. Knowing these things in advance and incorporating them as much as possible into your offer could well make the difference between acceptance or not.
Here’s wishing you successful negotiations and a move into your new home in 2013.