Limited inventory in most Texas markets has led to fierce competition for purchasing homes.
Here are some things to keep in mind for buyers when multiple offers are in play.
Buyers Face Stiff Competition for Properties
Many properties are going under contract quickly and often with multiple offers above listing price. Consider these tips for helping buyers put their best foot forward in this increasingly common scenario.
Prepare to Possibly Pay More
With such limited supply but no decrease in demand, home prices have been rising in most Texas markets. Stephen Etzel, a real estate educator, consultant, and broker based in Roanoke, Texas, tells clients to expect to pay full price in most situations. “In some markets, people are paying $10,000, $15,000, $20,000, or higher over the listing price.”
Prepare for the possibility they may have to pay out-of-pocket. Since lenders approve loans based on the appraised value of a property, buyers may need to close the gap between what they can borrow and the price of their offer. You can help set buyers’ expectations by showing them recent sales information.
Make Sure to Understand Appraisal Addenda
It’s important to understand how to use TREC’s Third Party Financing Addendum (TXR 1901) and the Addendum Concerning Right to Terminate Due to Lender’s Appraisal (TXR 1948). Knowing ahead of time how the provisions of these forms work can help buyers make faster choices about how they want to structure their offer and what protections they want in place pending the outcome of the appraisal.
Get Pre-Qualified
Sellers like offers from pre-qualified buyers, since those buyers have already contacted a lender to see how much money they might be eligible to borrow. Cash offers—for those buyers able to do so—are another attractive alternative to sellers, since they are easier than more complex financial arrangements.
Etzel points out that pre-qualified buyers know their budget and can make offers more quickly than buyers who haven’t taken this step.
Be Ready to Move Quickly
Texas homes spent an average of 48 days on the market in January 2021, down from 68 days in January 2020. Many properties are selling much faster than that. Etzel recommends counseling buyers so they know exactly what they’re looking for and can make offers quickly. If their offer isn’t selected, buyers need to be able to move on just as quickly.
Be Accommodating to the Seller
Etzel says one way to stand out is to make fewer demands of the seller. Each request is one more reason the seller might choose a different offer. Your client might forgo asking for closing costs or seller concessions, or even offer to pay for the owner’s policy of title insurance, as described in Paragraph 6 of the One to Four Family Residential Contract (Resale) (TXR 1601).
Earnest Money Amounts Can Help
Buyers who commit more earnest money show the sellers they are serious about buying the property.
Don’t Overlook Option Money
Offering more option money may be even more attractive to sellers than a higher amount of earnest money, Etzel says. The option money goes to the seller even if the buyer terminates, which can be enticing.
Hope these tips helps you to land your dream home faster.
Source – Texas Association of Realtors
