Marshall Park is a D.C.-based real estate agent at Redfin.
Last year, the spring real estate season started off with a bang, but this year it has been more of a quiet rumble.
Overall market speed slowed again in January, with homes in D.C. sitting on the market nine days longer than in December. Despite the overall slowdown, the number of homes that went under contract within two weeks jumped from 30 percent in December to 34 percent in January. That indicates determined buyers are still keen to quickly make offers on the most-coveted listings. Bidding wars peaked in April 2013 when 69 percent of Redfin buyers in D.C. faced multiple-offer situations.
With those bidding wars still high at 51 percent in January, buyers should continue to expect fierce competition when making an offer on a home in a desirable neighborhood or school district.
The key to winning is to write a strong, clean offer and to submit it right away. Don’t expect a seller to accept a low offer when homes in D.C. sell for 99 percent of list price. You also want to make the other terms of your offer as agreeable to the sellers as possible. Every home-buying situation is different and your real estate agent is your best adviser, but here are some tips:
• Be strategic about your offer price. Work with your agent to do your homework. Look at comparable homes nearby that recently sold, find out how many offers you’re competing against, look at the listing agent’s deal history and be honest about what you are willing to pay.
You might not be able to pay more than list price, but you can increase the earnest money deposit amount to show that you’re serious. If the listing agent asks for your “highest and best” offer, give it. You don’t want to have any regrets about your final offer.
• Be flexible on the closing date. The closing date can be a big stressor for sellers, who want to ensure that once they accept an offer it will close in a timely manner. Being accommodating to the seller’s needs will make your offer more attractive.
You can shorten the window for getting an inspection and financing approved. A good local lender will be an advocate for you and can, in most cases, get a buyer’s financing approved in eight days. They can even call the listing agent and vouch for your financing.
• Offer the sellers a free rent back. With record low inventory levels, sellers are also concerned about finding a home once they sell. You can offer to close and let the sellers rent the home or stay for free, so they know they have a place to stay. We’ve heard about lots of sellers who move in with family or are forced to move twice because their home sells faster than they expected.
• Be smart about the home inspection contingency. Waiving the inspection contingency can be risky, especially if it’s an older home. But you can do a pre-inspection on the home before you make an offer. This strategy isn’t used in every city, but D.C. sellers and agents should be familiar with it.
You can also do a home inspection for informational purposes and assure the sellers that you won’t ask for money off the list price for repairs. This allows you to walk away if you find out the foundation is cracked, but lets the sellers know you won’t negotiate for minor repairs.
There are numerous other strategies you can use to make your offer stand out. The most drastic is waiving the financing contingency. While potentially risky, a recent Redfin report found that waiving the financing contingency improved the chance of winning a home by 23 percent.
This is less risky for buyers who can make up any financing discrepancies with cash but, no matter what, your lender has to be part of the conversation. The same report, which analyzed data from more than 2,000 offers written by Redfin agents in 2013, found that including a personalized cover letter with your offer can improve your chances of winning by 18 percent. My advice for writing a cover letter is to be personal and honest. Don’t just say what you think the sellers want to hear. It will appear disingenuous and it will show.
Go into a bidding war with a clear idea of how much the home is worth to you, and how far you’re willing to go to win it. Don’t do anything you’ll later regret, which for many buyers includes waiving your right to negotiate the price or to back out after the inspection.
A trustworthy agent will help you determine which strategies are best for you for a given home, and will also help you decide when to throw in the towel and move on to the next home.