If you are looking for a home in Richmond, Virginia, you may have heard from a lot of people that the real estate market is crazy right now. And they would be right! Yesterday, I took a look at how many months of inventory there is in the Richmond area – the months of inventory is a number that lets you know how long it will take for all the existing homes on the market for sale will sell if nothing else comes on the market! A normal real estate market is thought to be about 6 months – in our area there is less than 1 month of supply!
So when you have this tight a real estate market, and a lot of buyers looking for homes, it is not surprising that when homes come on the market, it becomes a feeding frenzy for these homes – and bidding wars! Sobefore beginning your search for a home, talk to your Realtor and lender to decide just what strategies you are going to use to win the bidding war when you find that perfect home!
Here aresome creative strategies!
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Make loan application & get a loan commitment – not a loan pre approval! Have the loan commitment signed by the underwriter, not the loan officer! And make sure that the seller knows that this is a loan commitment, not a pre approval!
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Bump up your offer price! In a bidding war, if you only offer the asking price, you will most likely not get the house! I took a look at everything that has closed in the Richmond area since January 1 & almost 44% of those homes sold above the asking price.
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Increase your Earnest Money Deposit! The Earnest Money is the money you will need to put down at the time you write your contract! Some buyers have put down a 1% deposit, others have put as much as the entire down payment as their deposit and some buyers have even made the earnest money deposit non-refundable if their contract does not close!
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Allow the seller to retain possession after closing for a period of time at no charge! Many sellers need to close on their home first in order to get the equity from their home sale to close on another home. Offering to allow the seller to stay in their home another 3 days to a week at no charge can be an incentive to the seller!
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Shorten the Inspection time! Instead of putting in a 10 to 14 day inspection time frame, why not put in a 5 day inspection period! Have your inspection appointment set up as soon as you write the offer – don't wait until it is accepted! Have your inspector on speed dial!
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Waive Contingencies! In your offer will be several contingencies – appraisal, financing, inspection and possibly a home sale are the most common contingencies! Waiving any or all of these will put your offer well ahead of others!
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If You Can’t Waive Contingencies! You may not be able to waive the contingencies, but sometimes you can get a little bit creative in how you handle these contingencies – a commitment letter rather than a pre-approval letter; agreeing to pay the difference between purchase price and appraisal if the appraisal comes in low; putting a rush on the appraisal by the lender; revising financing if the appraisal comes in low!
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Offering The Seller Money Towards Moving Costs! One creative solution I heard about was a buyer offered a tenant money to move out by a certain date!
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Cash For Keys! Perhaps the seller is an estate, or it is a divorce or the seller is downsizing and needs to get rid of things, the buyer could let the seller know that they don’t have to do anything but turn over the keys at closing – no cleaning, no removing any junk – buyers will take care of that after closing!
Not all these ideas will work for everyone – and some may not be very comfortable for buyers! But when you are in a bidding war for the house that you love, you may have to become very creative in your offer! But before you go out looking for a home, talk to your Realtor and talk to your lender and do all the things you need to do so that you are in the best position to win that bidding war!
I know that this market is a bit scary – and many buyers are not comfortable with what they may have to do in order to get that home! But it can be done – with patience and creativity! If you have questions, feel free to contact me and I would be happy to help!
