David Charron, president and CEO of Rockville-based multiple-listing service MRIS, writes an occasional column about the Washington-area real estate market.
We are entering the spring real estate season with a renewed sense of enthusiasm. As spring arrives with a continued increase in buyer demand, there is still not enough of an increase in inventory to satisfy it.
Data from the MRIS subsidiary, RealEstate Business Intelligence, shows that new listings for February were down 3.3 percent compared to last year. As spring unfolds, we don’t think the market will be as tight as it was in 2013 but we also believe there probably won’t be enough homes to fully meet the demand.
While buyers won’t have to resort to measures as extreme as last year, they will continue to face stiff competition. Here are a few tips to increase your chances of being the winning bidder in any real estate scenario:
• Know what you can borrow. It all starts with the money, of course. In years past, buyers would often be fine with just a pre-qualification letter from their bank indicating the mortgage amount they would likely be approved for.
If last year’s pattern is any indication, buyers who have a pre-approval letter will be the most attractive to sellers. Simply put, the difference between the two is that qualification letters are based on what the applicant says they have to spend while approval letters come after a bank has taken the time to verify the buyer’s financial picture.
As a result, the loan amount pre-approved buyers come up with is taken much more seriously. A major strategic move for buyers is to ask for an approval letter stating the maximum amount they could borrow, even if they plan to buy a property costing far less. This is ample proof to the selling agent that the buyers are a safe bet and are unlikely to have any hiccups during the process. Do not underestimate the importance of this distinction.
•Get there first. Aesop’s fable of the tortoise and the hare does not work here! After finances have been addressed, focus on speed — not just for finding the right property but also for proving to the sellers that you are motivated and capable of having an expedited closing.
In addition to setting up alerts on real estate search sites, ensure you are working with a trusted real estate professional. They see all the listings first and can contact you as soon as your new home hits the market. Even if there is an open house scheduled for the upcoming weekend, it could be a smart move to have your representative let the listing agent know a motivated buyer is ready to act.
• Stand out among your competition. Once you make an offer, shift your efforts to standing out among other prospective buyers.
Keep in mind that sellers are sensitive to anything that would create more work or expense for them, so if you want to request contingencies or seller credits, discuss those items with your agent before mentioning them.
Play it safe even during informal discussions when you’re asking questions about the property. Casually wondering out loud whether the sellers would agree to a credit for having the house painted (or garage door repaired, or flooring replaced, etc.) could tip the balances out of your favor.
• Be flexible with your time frame. It’s a good idea to offer as much flexibility as possible with the time frame for handing over the keys.
Some sellers need to be able to stay in the house until a certain date, so a generous “post-seller occupancy” agreement can help greatly. On the opposite end of the spectrum, some sellers need to move as fast as possible so promising them a fast turnaround on all the paperwork and inspection appointments will work in your favor.
Ultimately, the real estate process does not have to be complicated. With preparation and a willingness to be flexible on the terms of the sale, many buyers will stand a good chance of being a homeowner before summer rolls around.
Previously from David Charron: