Sunday, February 3, 2013

Buying a house inside the loop - Houston Real Estate

From time to time, I like to write about Real Estate, although, this is not a Real Estate based blog. However, I feel compelled to write about the market right now. In a nutshell, it is crazy!

If you are a buyer looking for a home in Houston (specifically inner loop), right now, you probably know what I mean. If you are a seller, you are likely very, very, happy. Buyers cannot find houses and sellers cannot sell them fast enough. If you are a seller with an appropriately priced home (and a desirable location, floorplan, etc.), you can assume you will be under contract by the end of the first day the home hits HAR.com. Moreover, you will likely reap the benefits of a multiple offer scenario, or what some refer to as a "bidding war".

Why is this happening? There simply is not enough inventory available for the plethora of buyers that are looking. With a looming fear that interest rates will increase in 2014, consumers are trying to take advantage of historically low rates--sometimes as low as 3.25%.

When faced with so much competition, how does one take advantage of today's low interest rates and purchase a house?

Here are some ideas of things you can do that can put you at an advantage:

1.) Work with a Realtor who has connections with other Realtors specializing in the area. Typically the listing agent (with seller approval) will share with other agents (who they have relationships with) when they have a listing coming up. In many cases, houses are already under contract before they ever reach mls. Working with a Realtor who has information about unlisted properties could be beneficial.

2.) Have your Realtor set you up on an automatic search. This search will immediately email you when a home that fits your criteria hits the market. You will need to be prepared to visit the house within 2-3 hours and bring along a full-priced (or higher) offer in hand. That might seem presumptuous, but, if you are looking at it, there are probably at least 5 other people who are and who will also submit an offer.

3.) Make your offer desirable. Right now sellers have the luxury of being choosy. If you want to stand out from the rest, remove items from your offer that could be considered negative. Examples of this include long closings, seller contributions to closing costs, requests for appliances or other excluded items, long option periods, etc. In addition, if you have a contingency, you will not be at a competitive advantage. Your best option is to sell  your home and do a leaseback, if possible, or find a temporary residence while you search for your home.

4.) Always have the most recent lender approval letter to submit with your offer. Work with your lender to obtain full credit approval--not just pre-approval--for submission. This shows that you have submitted your documents to the lender and that you are  approved based on a more detailed check of your finances. It is a step further than pre-approval and would put you at an advantage over most buyers who submit with pre-approval only.

5.) Ask your agent to put a deadline in the contract for the seller to respond. I request that the seller respond within  5-6 hours with the caveat that the offer "will be considered void" if they do not respond within the requested time-frame. If you do not, the seller will likely hold onto it while collecting other offers. Inserting a deadline does not mean they have to accept your offer, but it does require the seller to respond in order to keep your offer on the table. This practice can put you in a good position if the offer is strong and the seller is afraid of losing it.

6.) Write a letter to the seller. I've written about this before. It might seem silly, and it does not always work, but it can be beneficial. If there are multiple offers on the table, and your offer is under consideration along with someone else's, then a nice introduction  letter to the seller could be the difference. Sellers have emotional connections to their homes--it is their first house, they raised their first child there, etc.--so appealing to the seller on a personal level could push you in front of someone else who is still only a number on a piece of paper.

These are just some suggestions, and in no way does it  guarantee your offer will come out ahead of the pack. The most important thing to remember is that something will come along, and not to get frustrated. It is a terrific time to buy or sell in Houston!