If you were looking to buy a home under $200,000, expect some heavy competition this summer.
I have a new listing in the southwest area of Las Vegas that is super cute and priced to sell. I felt like we priced it according to the upgrades of the home and not entirely on what had recently sold in the last six month. I don’t think the sellers expected this kind of response. I sure didn’t.
Because of the price point, we had mostly offers from owner-occupant, first time homebuyers. Nearly all of them were using an FHA loan. These loans are great because you only have to put 3.5 percent as a down payment. If you have a slightly lower credit score, this would be the way to go if you can’t qualify for conventional loan.
When we have this much competition for one property, people start offering more money than the asking price. That’s great but if the buyer is using a loan, there will be an appraisal. If the house does not appraise for the agreed-upon price, we may be back to the negotiating table. FHA buyers may be at a disadvantage in the offer stage because the FHA amendatory clause offers an “out” to paying the originally agreed upon price. With the sellers knowing this, they may not choose an FHA buyer to go into contract. I discussed the amendatory clause with two different lenders and got two different opinions. One felt it did not preclude the buyer from paying over the appraised price. The other felt it did. My clients rather not take that chance and decided to go with a non-FHA buyer.
So that took out the majority of offers. But the remaining ones were all very close. All were aware of the fact that the home might not appraise for the over-list price. So all of them set a limit on how much more they would be willing to pay on a low appraisal. The one that stood out to us though was the one that made the effort to get preapproved by our preferred lender and offered to pay some of the traditional seller costs like transfer tax and title insurance. The price they offered to pay was not the highest, but because of the way the offer was structured, it would net the sellers the most money. They also did not ask for any repairs or concessions, and they did not have any contingencies for the purchase of the home.
The agent contacted me several times during the offer process and politely ask questions and listened for any advice I might give. She was never pushy or demanding, but she gave me a clear picture of who her buyer was and did not call me just to say, “hello” like other agents. Some agents didn’t even bother to call me and just emailed the offers to me. That’s fine if you think your offer is *that* strong. But if you know your client’s offer is in the middle of the pack, you should at least try to contact the seller’s agent once.
In the end, I know the buyer we chose is excited to win the bid and I think he should thank his lucky stars to having a good agent help him put the offer together.