With inventory scraping the bottom of the barrel and demand for housing on the rise, prospective buyers in Durango need to be ready to take action quickly to close a deal. As the busiest transaction season begins, real estate agents shared trade secrets to getting the right house under contract, responsibly, in a competitive market.
A Redfin report on the most effective bidding strategies of 2013 said an all-cash offer is the No. 1 bidding strategy, increasing the likelihood of buyer success by 28 percent. A less common but apparently effective strategy: a cover letter. A personalized appeal to the seller explaining why the house is the buyer’s dream home introduces the human factor and increases a buyer’s likelihood of closing the deal by 9 percent, Redfin found.
If a buyer puts his highest offer out there up front, he may pay more than he needs to. Buyers should add a clause in their bids specifying an initial offer and the maximum amount they’re willing to outbid other offers.
The county assessor’s office can also tell a buyer if the seller has outstanding property taxes, which can be a useful negotiating chip.
If the buyer has spoken to a lender but it’s been a year, schedule another appointment, because the buyer’s financial qualifications may have changed. Even the little things, like new credit card charges, can affect whether a buyer qualifies for a loan, and a lender can address that. For this reason, buyers should refrain from large purchases in the months preceding a home purchase.
“You need to see where you stand and make sure you’re not wasting time looking at properties that don’t work for you,” Coldwell Banker agent Aaron Schenk said. “With such low inventory here, you have to be ready to go under contract quickly and be ready to act.”
Loan, title and appraisal contingencies are standard and allow buyers to terminate the contract under certain circumstances, such as instances when the house is not worth the listing price, the buyer cannot secure a loan or there are liens on the property. However, competitive buyers sometimes forego those options to make their offers more attractive to sellers.
“Some people in very competitive situations will waive some of the contingencies,” said Steve Setka, an exclusive buyer broker with Keller Williams. “That could be someone who says they’ll buy no matter what the appraisal is, because they have a big down payment.”
That said, waiving contingencies is a gamble that should be reserved for confident buyers with a secure financing plan.
Buyers should know that being pre-qualified for a loan does not equate to being pre-approved. The former only means that a buyer could qualify for a loan; the latter is proof to the seller the buyer is capable of making payments. Sondra Joyce, a local buyer’s agent, said pre-approvals should come from a lender who knows the market, not an online assessment.
“A lot of people go online and are given a great interest rate, but there are hidden fees and they have an online relationship versus a personal one,” Joyce said. “You’re sharing tax returns and other personal information, and it’s better to entrust that to a local lender. And most people use Zillow or Realtor.com, which are very good informational sites, but often a house that has already sold or is under contract is still on their websites, so it gets people excited about things that aren’t available anymore.”
Listing agents work for the seller, so buyers lose some negotiating power by working with them. A buyer’s agent typically does not have listings and therefore no interest in selling.
If a buyer thinks a resell is a possibility down the road, the biggest house might not be the best. Despite size and amenities, a house’s value increases in proportion to its neighbors, and a high-end home is a niche sell that can alienate some buyers.
Buyers also should keep realistic expectations of how far their budget will stretch.
“People have a high expectation of what money will buy, but the most important thing is to pick a location you really love and a house that has good bones,” Joyce said. “Don’t worry so much about the granite countertops if you’re in a lower price range. That can always come later.”
The Regional Housing Alliance of La Plata County periodically offers a homebuyer education course. The eight-hour program can help participants qualify for mortgage assistance programs through the RHA or just provide information for first-time homebuyers on buyer readiness and the selection, financing and closing processes. The organization, which is dedicated to finding housing solutions for the region, also offers one-on-one pre-purchase counseling.
jpace@durangoherald.com
