Real Estate What I Know for Sure-Buyers be Prepared March 23, 2021

by Teresa Larson Village Real Estate, Sandy Utah
30+ year’s real estate experience

What you are up Against as Buyers/ Multiple Offers

We have had multiple offers going on here in the Wasatch Front area off and on since at least 2016. Prior to 2020 the multiple offers were more in the spring peak selling season tapering off in the late summer, fall and winter with buyers interest increasing in the early spring. Multiple offers meant getting a few offers as a buyer you were not going up against as many offers as you are now. The huge influx of buyers here in the Wasatch Front due to various reasons has made 2020 get a little crazy for buyers competing against each other to buy homes, 2021 is the same if not worse. Some buyers are even sending cookies to the sellers hoping that sweetens the deal for them!

Multiple Offer Ideas

  1. Other buyers are offering over list price. Some offering over list price by as much as 10% or more, but not all. It depends on area popularity, zip code.
  2. Other buyers are offering additional non refundable deposits not contingent on getting it back if the sale fails due to due diligence, appraisal or financing problems.
  3. Some buyers are waiving appraisals. This works best with cash buyers or buyers with large down payments. If you are financing your lender may require an appraisal. Your real estate agent can check with your lender and see if your down payment and the home would qualify for a waived appraisal. They have a program they input your information, down payment and address and see if the CV loan will allow that. With larger down payments some CV loans can have the appraisal waived. FHA VA loans require appraisals. Our Utah Real Estate Purchase Contract refers to  financing/appraisal condition. There is a place to check off if it is subject to appraisal or is not subject to appraisal.
  4. Buyers are adding to their contracts that they will pay X amount over appraised price not to exceed x amount if the appraisal comes in low. This helps assure a seller about you verses a cash buyer if you are financing.
  5. Some buyers waive the due diligence. I would not recommend waiving the due diligence. There are a few buyers that do waive due diligence.  You really do need to know what you are buying and inspections and other due dilligence helps you understand better.  and all the little maintenance items that may be suggested by an inspector, not to mention problems that might be bigger than expected.  Waiving the due diligence means you accept the house as is. Your purchase if you waive due diligence is not contingent on any inspections or findings. Our Utah contract refers to the due diligence condition there is a place for you to check off if it is subject to due diligence or is not subject to due diligence.
  6. Some buyers are offering to pay the sellers closing costs in part or full. It is best to list an amount that you are willing to pay toward the sellers closing costs so it does not become an argument down the road in the transaction..
  7. Some buyers are letting sellers rent back while they find a home. A short term rental agreement should be signed in this case.

Not all buyers do all these things.  Using at least some of these ideas may help you secure a home. Ask if you can be back up if you do not get selected as the primary offer. Unfortuneately some contracts fall apart in our market.

Get Fully Qualified If You Are Using a Loan

If you are not a cash buyer You need to get qualified for your mortgage loan / financing. Not just pre-qualified. You need to be ready when you start looking for your home, so that when you find the home you want you are completely qualified minus the property. Use a lender that will get you all the way qualified without a property.  That means they have verified your income, time on job, credit, debt to income ratio. They have reviewed any important documents they need for the loan. Such as Trusts, Divorcee Decrees, etc. You might have to shop around to find a lender that will be willing to do the entire process without a house.  Be demanding on your favorite credit union or Bank ask if they are willing to do that type of qualifying for you to be able to be one step ahead of some of the other buyers with a quickie pre-qualification letter that is based only on the information you provide at the loan application and your credit report.  Telling the lender exactly what you need. You need a letter that says they have reviewed your credit, down payment funds are verified, income and time on job are verified.  You are fully qualified for up to your Purchase price the down payment and type of loan.

When you find out what you are qualified for it would be a good idea to shop below that price so that you will have the ability to write a higher than list price offer when you need to.  As a buyer it might feel strange doing that at first. In my experience you have to lose out on a few offers before you realize that you may have to offer higher than you would have imagined to get a home.

Appraisals Coming In Low

Here Sometimes when appraisals are needed. Appraisals come in low. Have language in your contract originally that spells out if you are willing to pay a certain amount over appraisal with a cap on that amount you are willing to pay. This would be additional cash over your original planned down payment. Make sure you have that extra amount available in case you need it.

How Much Can You Qualify For

Talk to your lender and find out how much you can qualify for then possibly just consider only looking up to $30,000 less than that price. This could give you some room when you find a home you like to offer more than asking.

A Good Real Estate Agent

A good real estate agent will help you with all of these things and can show you the real estate purchase contract before your purchase so you can be familiar with it when you find the home you like.  Be patient in looking and getting an offer accepted. Don’t give up. Keep trying! Additionally agents need to be able show you area statistics but keep in mind as of today depending on your zip codes residential real estate is usually selling for more than it is listed for in the Wasatch Front area.

Wastach Front Statistics March 23,2021

Sources:
Utah Association of Realtors Utah Real Estate Purchase Contract approved August 27, 2008,
Teresa Larson Village Real Estate, Sandy Utah (801)750-5446
©Teresa O Larson PC,  March 24, 2021