Battling For Backup

My buyer visited a new listing the very next day after it came on market. The home went pending that same afternoon. Less than one day, and gone! I called the agent to ask if we could present a backup offer (in case the sale with the current buyer fell apart). The agent said yes, but that there were two, possibly three other back up offers that we would be competing with. Oh brother…competing for backup position?

Tapper

 

So, there I was, writing a backup offer above list price and with several other bells and whistles that we hoped would make our offer the best of them all.

 

It was interesting how good it felt when the seller selected our offer over the others. HOORAY, we had won! I felt great… for about two or three seconds. Then I remembered that we didn’t actually get the house yet. We still had to wait and pray that the first position buyers changed their minds, chickened out, lost their financing, got arrested and sent to jail (etc., etc.).  Of course, we’re not wishing for harm to come to those buyers, but we are definitely hoping SOMETHING happens that will move us into first position. Sigh…I also can’t help but wonder if our backup offer is actually even better than their offer. 

For sellers, a signed and accepted backup offer is a powerful tool to have in place. It offers peace of mind knowing they will not have to go back on market should the first buyer bail out. It can also add leverage during negotiation of repairs with the first buyer. Sellers don’t feel as much pressure to agree to expensive repairs requested by the buyer. They just need to have their agent inform them that they have secured a contract with a strong backup buyer who would LOVE to take their place.

Supply and demand folks….supply and demand………

Cheers!

      Kevin G.                  Kevin@KevinGormanSells.com

carry-money-house

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The Property Must Appraise

When I complete a market analysis for my sellers, it shows a suggested price range for listing their home. This range is based upon a detailed comparison of the homes that have sold in the past 3-6 months and within a one-mile radius.

Lately, I have been suggesting that my clients list their home at the high end of my analysis. Then I watch them stare off into space with a big silly grin and dollar signs rolling through their eyes.

Jackpot At that point, I gently remind them that if they accept an offer from a buyer who is obtaining a loan, the property must appraise at or above the final purchase price or the lender will not approve the loan. 

It is common in our current market that multiple offers are pushing prices above list. Sellers should discuss all offers carefully with their Realtor. The price offered by a buyer with a loan can realistically only go “so high” until there is a risk of the home not appraising at purchase price. If that happens, the transaction can fail.

The solution for sellers?…Before accepting a questionably high offer from a buyer who is obtaining a loan, the seller should negotiate that the buyer will agree to move forward with the purchase regardless of appraisal result. That way, if the appraisal is low, the buyer will have to move forward anyway and pay the difference between a low appraisal and the agreed upon purchase price. In addition, seller should require buyer to immediately provide proof that the buyer has the ability (additional cash beyond their down payment and loan closing costs) to do so. All of this, in writing right up front and upon acceptance of the offer. 

On the other hand, if given the choice, a cash offer could be a seller’s dream. In this case there will likely not even be an appraisal to worry about… JACKPOT!

Happy selling 🙂 

       Kevin  G.           www.KevinGormanSells.com

PEAK

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Are You Rich Yet?

Want to know your home’s approximate appreciation percentage for 2015? Cool, no problem! The information is within…and here’s how I obtained it for you:

We Realtors in the Portland and SW Washington areas subscribe to the Regional Multiple Listings Service (RMLS) which is one of our main tools in helping us list and sell properties. In addition, the RMLS provides us a monthly report entitled the “Market Action Report” which details tons of local real estate data. We use this data to help us inform and advise our clients on the state of the current market.

The RMLS has divided the region into separate areas and assigned each area a number. This allows statistics to be extracted that are specific to the individual areas.

So what’s your number? You can check the map below to find what area and number your home is located within. Then, you can check the 2015 year end report link (also below) to see your appreciation rate and other interesting market data.

Since this report is available monthly, I can provide this information to you upon request, just say the word!

2016 will be another “Seller’s Market”. I would be happy to answer your questions about listing or buying a home in 2016.

RMLS Area Map

Area Report Click here for the 2015 year end data on your area.

 

Cheers!      Kevin G.

www.KevinGormanSells.com 

PEAK

 

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