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Craazy Market-How to Get Your Offer Accepted

April 11, 2012

This market is craaaazy… Generally we have 1.2 months inventory on hand.  This is based on MLS Statistical Report for the five areas we service from Bay Point to Discovery Bay; there are 428 active listings and an average of 353 sales per month.  Wow, that is incredible.  This means multiple offers on most properties, particularly low end, say under $400K.

Statistics for: AND Date Range=01/01/2012-06/30/2012   AND Area=6200, 6100, 6300, 6500, 6400, 6600; As Of: 4/11/2012
Class Bedrooms Current Active Avg List Price Avg DOM
All All 428 $361,074 63
RE All 428 $361,074 63
Class Bedrooms Total Listed Num Sold Pct Sold Avg List Price Sold Avg Sale Price Sold Sale Price/List Price Ratio Avg DOM Sold Avg List Price Unsold
All All 1,597 1,060 66.37% $226,291 $224,788 99.34% 53 $248,623
RE All 1,597 1,060 66.37% $226,291 $224,788 99.34% 53 $248,623

So, as a buyer, how do you compete?

First, make sure you are qualified by a major lender first.  Often you will have to be prequalified by another lender: Chase, Wells Fargo, Bank of America.  Be prepared for this.  The lender wants to make sure that you could qualify under their guidelines if the original lender cannot complete the transaction.

Second, ask yourself does the loan I am getting match the condition of the property?  Only go for an FHA loan on a property that meets FHA standards.  Does the property have a heat and cooking source, for instance?  A conventional loan with 20% down is best choice but do you really need to ask for closing costs as well.

Third, offer the highest possible purchase price the first time.  Save yourself and your agent headaches by overthinking.  What are you willing to pay for the property?  Do not think about what others may do-this is going to be your home or investment and you need to feel and be comfortable with the numbers.  Be willing to say, I gave it my best shot and this one did not work or yeah! this one did work and move forward.  Take a look at what has sold in the last few months.  Be prepared, if you are making an offer that is much higher than the most recent sales, to be willing to make up the difference between appraised price and offer price.   If you make an offer, then be willing to stand by that price.

Fourth, the Seller wants to maximize their bottom line, so along these lines, the standard fees most Sellers will pay is natural hazard report and county transfer taxes.  If you ask for a home warranty, then that reduces the Seller’s net income; you might consider buying that yourself.  In addition on an REO, the Seller will often pay the CLTA title fees if you use their recommended title/escrow company.  This saves them time and money because that title company already has a history with that property.

Finally, take a look at what is reasonable time to close.  Most Sellers cannot close before 20-25 days.  This will work easily for cash sales even allowing 7-10 days for inspections.  For a financed offer, FHA or Conventional, allow and 17-25 days for loan/appraisal contingency and another 10 days after that to get loan documents signed and back and forth for funding.  So, total time to close can take anywhere from 22 days to 35-45 days depending on the loan.

All in all, make an informed decision when making offers.  It is a numbers game.  You may have to make several offers before you are able to buy a home.  Hang in there and be loyal to your agent.  They know you and will work for you before, during and after the transaction.

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