Q: My wife and I are trying to buy a house in Fairfield County, Connecticut, and we keep losing auction wars. We offer above the asking price, but we cannot pay in cash. How much do we have to offer to get a house? Is there a magic number, or is it a pipe dream and we will never find one?
A: You are in a sellers market, so any reasonably priced home is going to have some serious competition. Just compare the first quarter of 2021 to the same period in 2020 in Fairfield County: the number of home sales jumped 43% and the number of listings fell 57%, a record decline rate, according to a report by Douglas Elliman. This story is reproduced in markets across the country.
“It’s a trial by fire, where the buyer has to learn through the pain that he doesn’t have as much control as he thought,” said Jonathan J. Miller, president of the company. Miller Samuel review and author of Douglas Elliman. report.
Jennifer Thomas, a licensed Metalios salesperson in Greenwich, Connecticut, said in her market, the winning bid is typically 10 to 15 percent more than the asking price. But not always. “I had winning offers and we were not the highest offer,” she said. “It’s not just about your price, it’s about your terms and conditions.”
You probably know by now that you should be pre-approved for a mortgage before you bid, and buyers who can forgo contingencies (or pay cash) have a clear advantage. Talk to your wife about any contingencies you are willing to forgo, such as an inspection or an assessment. If you forgo the possibility of an appraisal, for example, and the house is valued at a lower price than your offer, will you be able to increase your down payment to close the mortgage shortfall?
There are other ways to sweeten your offer. Ms. Thomas often talks to listing agents to find out which terms are most important to the seller. Maybe the seller wants to close a deal quickly. If so, line up the inspection even before your offer is accepted to show the seller that you will be moving at lightning speed.
Another strategy: try to find homes before they hit the market, have your broker do some research on your behalf, and do surveys wherever you can. Post your request to local neighborhood groups to see if a seller will speak to you before the house is listed (a friend of mine did this last spring, ending up with a house that was never even put on the list. the market.) Eventually, with enough courage and patience, you will find someone willing to sell you their house.
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