Once you start your search for a home, you quickly discover the importance of competing effectively. Ask your realtor if there are many other buyers in the market. How quickly are homes selling in that neighborhood? Are they selling above asking price? By how much? Are the buyers going to occupy or rent? Or flip it after some repairs/upgrades?
The Occupant Buyer
Here you are competing against another buyer who is also planning on living there. You will need to consider all of the above plus how can you make you offer more attractive. Does the seller need more time to move? Do they prefer a larger Ernest Money Deposit? Share details about yourself and how you see the property becoming your home.
The Cash Buyer
The appeal of the Cash Buyer is that the deal can be wrapped up very quickly. A buyer using financing will take at least twice as long. The downside is that a Cash Buyer is interested in getting a deal. They are not offering full price. So offer the asking price at the very least. Show them your pre-qualification letter. They may ask to speak with your lender and/or that you pre-qualify with their lender. Their lender can usually be referred to your lender for any questions. Go along with their request to make it to the final round. Then you are negotiating more tangible things like the exact closing date.
The iBuyer
Now we are seeing the introduction of the iBuyer. Like the Cash Buyer, the deal is all cash and can be completed quickly. iBuyers are on-line and do almost everything (except the home inspection and appraisal) over the internet. They have their own schedule of fees that they charge in place of a commission. This is very appealing to sellers as the seller believes they will save money by not paying a commission. They reality is quite different (see diagram for national averages). As with the Cash Buyer, offer the asking price as a minimum and stress the fact that the amount the seller will walk away with is a known quantity. Your lender and their escrow company can work together to get you a Settlement Statement that shows the seller’s bottom line.
If you need help with competing effectively when buying a home, reach out to me at 760 622 5087 or [email protected]
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