BY Kay Wilson-Bolton
March 1, 2009
If you find a home you think is a “good deal”, chances are someone else does too. To avoid disappointment, hassle and whatever else goes with this “new normal” way of doing things, here are some tips on getting your offer accepted—first and early.
If you want your offer to stand out, you are convinced the house is a good deal in the long run and you can afford the payments in the short run, make note of the following.
Make your escrow period as short as your lender can deliver.
Make your deposit at least 1% of the offered price.
Come as close to full price as you can. If you love the house, offer a little over. In this market of inventory shortage, you will have others competing for this home.
You won’t notice the difference in monthly payment but the asset manager will notice the difference in price.
If a termite report exists on the property ask about the cost of Section I. If the cost is affordable, don’t ask the seller bank to pay for it. Always agree to pay for Section II work.
Don’t ask the seller bank to pay for home protection plan. The trend is to cut them out—1000 homes time $330 per home protection, computes to a big savings for the seller.
Limit your inspection period to 10 days or less.
If you are going to ask for closing costs, offer a little more on the price. The days of banks paying 3% for costs and 3% for buydowns are generally considered to be over.
If others join you in the bidding, you may be asked to submit your best and final offer within 24 hours. If you are in that situation, improve your offer with the same suggestions.
If you plan to offer over asking price, don’t make it a game for another day. Don’t rely on the fact that the seller will agree to a price reduction a week before closing because appraisal did not match asking price. When this occurs, seller/banks may agree to reduce the sales price, but don’t count it. By this time, almost everyone is mad. Some sellers will cancel the escrow and start over. Others will reduce the price to match the appraisal.
The “per diem” charge is a penalty for late closing and is often $100 per day. To avoid these charges, make sure your agent requests for extensions on a form known as an Addendum. Very seldom are per diems charged if the asset manager is informed on the progress of the transaction.
Another sensitive area is when buyers ask for repairs. If you asked for and received closing costs up to 3%, you may not receive credit for repairs. If the seller does grant a request for repairs, it will be called “credit against closing costs”. It is possible that your request for repairs will not actually be received because you will not be given cash back at the close of escrow.
If your lender can legitimately increase closing costs to cover the costs of lender required repairs, the repairs will have to be paid with this money.
Wrap-up. Can it take a long time to get a response to your offer? Yes it can. Can it take a long time to get the escrow opened once the offer has been accepted? Yes. Are delayed closings often the fault of the seller/bank? Yes they are. Is the listing agent able to “move” the asset manager? Generally not.
There is a fair amount of frazzle within the real estate community over this “new normal,” real estate environment. Most accept the new rules and work with it. Most adapt and continue to serve their clients with intelligence, creativity, grace, imagination, and honest dealing.
Kay Wilson-Bolton is a broker for CENTURY 21 Buena Vista with offices in Ventura and Santa Paula. She can be reached at 805.340.5025 and met at www.readysetkay.com.