November 23, 2020

Resources for Homebuyers in a Hot Real Estate Market

Resources for Homebuyers in a Hot Real Estate Market

With low inventory and record-low mortgage rates, real estate in the DC metropolitan area remains competitive (despite a pandemic!). Many listings receive offers within hours of going on the market, and they close in days rather than weeks.

However, buyers should not be discouraged. There are many resources and strategies for making an offer as competitive as possible, and SMART has listed some of the most popular ones here for you.

Strategies for Winning a Contract

  • Offer above asking price. When possible, buyers can immediately stand out by offering above asking price in their first offer.
  • Be approved for the mortgage. Pre-approval letters are good, but a passionate buyer can ask their lender to approve a mortgage loan for a particular property.
  • But don’t use the fully approved amount as the first offer. Not only does this limit the buyer’s negotiating abilities, but offering the exact approval amount tells the seller that the offer could be in jeopardy if mortgage interest rates rise.
  • Choose neighborhoods and watch for "coming soon" properties. With homes moving so quickly, it is critical that agents and buyers keep an eye on listings in preferred neighborhoods to make an offer as soon as a desired property goes on the market.
  • More cash down. Obviously putting in a cash offer is ideal, but when that is not possible, offering more cash upfront makes buyers appear more prepared for the transaction while also lowering their monthly mortgage payments.
  • Remove as many contingencies as possible. If waiving inspection contingencies is too risky, then the buyer should keep the inspection time frame short.
  • Use an escalation clause. Basically, the clause says that the buyer agrees to outbid other offers up to a certain amount. This signals to the sellers that the buyer is serious.
  • Write a personal letter. Like a cover letter tells a hiring manager why a candidate is right for the job, a personal letter tells the sellers why a buyer is a good fit for that particular home.
  • Choose a closing date that best suits the sellers. Sellers will be more likely to consider an offer if the proposed closing date aligns with the sellers’ moving and closing schedules.
  • Enlist the help of a REALTOR®. Not only can a real estate professional help buyers find listings that meet their needs, but the agent can also help them draft competitive offers.

For additional information on this topic contact Evelyn Miller, Partner, at 202-753-7400.

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