How to get your offer accepted in a competitive market Episode #205
Todd: Hello! Welcome to Todd Miller TV. Joined here today with Oana, seems to be a regular now. So one of our agents here, Mike Madsen have some suggestions for a video and this is one of them. And, we’re in a scenario right now in Las Vegas where inventories disappearing. We have under 5,000 single family homes on the market. And there’s a lot of frustrations out there when people make offers because the most common thing we get is how many offers do you have? It’s not “do you have any offers? How many do you have? So being smart about how to write offers whether you’re an agent or a consumer is super important. So let’s talk about hat I have with you; when an agent or a buyer asks how many offers, what information are they trying to get?
Oana: They’re trying to game the system.
Oana: And there’s really no way to game it. Because the bottomline is, whether I have 1 offer or 15, you still don’t know the value of that offer. The thing that always, the question I get asked probably even more than that is: Okay you got multiple offers, I’m sure you do, what’s your highest offer so I could commit above that?
Oana: And that really is bothersome to me because what happens is, when they wanna commit above that, they’ll tie up the property, the appraisal will not match the purchase price, and that property will go back on the market because their either unwilling or unable to meet the difference between appraise value and purchase price. I have a property right no where, you know for the sake of argument let’s say that it’s listed for $100,000. I got an appraisal for it for $90,000, and I have offers on it for $110,000. But they’re FHA offers, and I’ve and an FHA appraisal out there for $90,000. So these people are never gonna buy this house unless they’re willing to come with $20,000 out of pocket.
Todd: Is it a Fannie Mae property?
Oana: It is.
Todd: Could they go Homepath and have not to deal with the appraisal.
Oana: So that’s really the/that’s really the big thing right now is they need to understand that if they’re going to go FHA or conventional, they’re going to have to cope with the difference. Because we have multiple offers, we don’t have to take appraised value, and if they want that house then they’re gonna have to go Homepath because remember, Homepath does not have appraisal.
Todd: Okay. So highest offer, not always the best.
Todd: Okay. So Mike wrote 2 things that I wanted to talk about. And this is kinda interesting. It’s the types of homes that quickly sell. Like what’s hot right now, and so this is what he wrote down: That turn-key homes ion high demand neighborhoods, excellent condition and priced well. So basically we’re talking about move-in ready for an owner-occupant in a descent area.
Oana: Right. But the thing you have to understand is, now while this home looks move-in ready, this home has been vacant for a long time.
Oana: And so we maybe re-painted it, maybe we put in appliances, and maybe we put in carpeting, it looks beautiful, and it is! But that home has been vacant for a long time. So people have to understand that when they’re moving in these homes, chances are that at those 1st 30 days are gonna seem like the money pit. Because they’re gonna run in to unbearably plumbing and electrical problems. I would say almost every homes is gonna run in to that. Because it’d been vacant for a long time and we just have now way of knowing what’s going in there. And until you’ve lived there, you’re not gonna know either.
Todd: Okay. So that’s actually very common because I hear a lot of people who will say “Why moved in and a month later we have a plumbing problem.” Well the house that empty for you know a year maybe, and by the time you got in the plumbing got on and it maybe took a while for the pressure to make something burst.
Oana: So those pipes become brittle overtime when they’re not being used so that happens a lot.
Todd: Right. Second thing that he set was Cosmetic fixers, so only cosmetic problems in good locations priced below comparable sales.
Oana: You know, in this market, I doubt it’ll be price below comparable sales. I think it can be above comparable sales and get your property sold.
Oana: We don’t have enough inventory to have buyers be picky. Sp if they find a home that they like and it looks pretty good. Then that’s probably the only choice that they have.
Todd: Well so what do you say to that buyer out there who says “Well I kinda like it, I mean it works, it meets all my criteria but, I think I’ll just keep looking. And then maybe in week if I don’t find something I’ll come back to this one.”?
Oana: Uhm, this will be gone in a week.
Todd: It’ll be gone in a week. Okay.
Oana: This will be gone in a week but at the same time it is important that you actually like the house that you’re making an offer on. Because you’re taking it away from someone else who actually loves the house. And for you to type a house and then back out a bit. It’s not productive for you and it’s not productive for anybody else and the market place either.
Todd: Well what happens, do you ever list a house like put it in the MLS and then an hour later get an offer in?
Oana: Absolutely yes!
Todd: Knowing they haven’t seen it.
Todd: But just trying to get an offer in and be the first one to try and get accepted before anybody else.
Oana: Yes. And we talked to them. And sometimes they say well, you know we know the house, we saw it when it was a short sale. We know we love it and we wanna buy it.
Oana: And under those circumstances, that’s fine. If I know that they haven’t seen the house then I will go ahead and ask them to go please see the house and I will let the seller know that they haven’t seen the house.
Oana: And sometimes the seller will say, well they have to waive conditions or something along those lines because the seller now knows that they haven’t seen the house either. And the seller does not want that property to be taken off the market for a buyer who is not committed to that property.
Todd: So, let’s say this happens a lot. That somebody writes an offer, gets accepted, but a week later they open Escrow, a week later they come in form out of town to see the house for the first time and they go “we don’t like it!”
Todd: So they write up cancellations instructions, do they instantaneously get their money back?
Oana: There’s nothing instant in Real Estate.
Todd: Okay. So even though they’re within their due diligence, until the seller signs.
Oana: That’s right.
Todd: And it could take 30 to/the seller has 30 days to return that EMD.
Oana: Right. And it takes time. I mean, you know between the buyer sign it ,the seller sign it, title processing, you know it just takes time, you know it’s not gonna be instantaneous.
Todd: Okay. And if you need that/if that 1 of or $2,000 is the difference between you and being able to get a house or not get a house, ’cause you’re going FHA and you need all the money, you probably don’t wanna try to keep cancelling Escrow and finding another house. ‘Cause you’re gonna run into a seller I’m taking, that just says “forget it” you know I’m not gonna return it or whatever.
Oana: Right. I mean if that’s seller’s you know puts in that contract, you know/we know you haven’t seen the property, and you’re gonna buy it as-is, forget the whole thing, you’re gonna have a problem. And there are some sellers out there that will play hard ball. In the end, they probably will return the money, but it may take a while and they will drag their feet and they’ll be punitive about it.
Todd: Okay. What last piece of advice would you give to a consumer who’s thinking of buying in the next couple months where we see more people coming in to the market to buy and houses disappearing?
Oana: Make up your mind. Fall in love with the house and then stay committed to it. And just don’t make offers on 15 properties and then back out of them. How would you like if that was done to you with a house that you love? But most off all, be committed to the property, be committed to the purchase price. Don’t think that “well, when it doesn’t appraise, they’ll reduce the price.” They won’t. Okay? They will cancel your deal. They will cancel your deal before you can even figure “I can get an appraisal review.” As soon as that appraisal comes back bad, either you already agree to meet the difference between the appraisal value and purchase price, or you’re out of there. We’re not gonna wait for an appraisal review.
Todd: Okay. Good. Alright. So, I just wanted to go over the things that Mike has sent me. This was really great. There’s so much going on, there’s so much that either you as an agent, or you as a consumer have to be informed about to be able to navigate this really complex dynamic market that we have here right now. It’s gonna stay this way. I don;t see a lot of houses coming on the market so I think we’re gonna have this, this is gonna be the new reality for at least a while.
Oana: You know, the wonderful thing about Las Vegas, our market changes so fast.
Oana: That it’ll be different a month from now.
Todd: We were from the hottest market in the world, to like the worst market in the world. And now we’re turning back into the hottest market in the world again.
Oana: Yes. The market is super heating right now and it’s a great time as always to invest in Real Estate in Las Vegas because there’s limited supply, there’s lots of demand and there are opportunities.
Todd: Yeah. Awesome. Okay. So that’s/that was it. i hope you got some good information out of this. Once again thanks to Mike for giving me the/some stuff to go over here. Anyway, that was my update for today and see you on another video. Thanks.