By Bruce Cathcart
We now know that the Coachella Valley real estate market is a seller’s market. That means that there are more buyers than sellers and that the excess demand is forcing home prices to go up. So is now a good time to even consider buying a home in the Coachella Valley? And if you are currently trying to buy a home, what can you do to increase your chances of being successful?
In last week’s article we learned that the primary reason that we are in a seller’s market is the lack of homes currently available for sale on the market. The other side of the equation is the increased demand for houses by buyers. Home prices have recovered somewhat from their lows in 2008 to 2009, but they are still a long way off from their highs of 2005 to 2006. In addition, interest rates until very recently were at historic lows. This combination of low interest rates with the relatively low sale prices for homes still makes now a very good time to buy a home in the Coachella Valley… if you can.
The challenge today is finding a suitable home and then submitting the “winning” offer. In certain price ranges the competition is so fierce today that a home properly priced and listed for sale for under $200,000.00 will receive over 20 offers in the first four days that it is on the market! This is not an exaggeration as I personally have represented both buyers and sellers in this situation many times over the last six months. For buyers and their agents this can be both frustrating and disappointing. But there are certain things that you can do as a buyer to improve your chances of being successful, even in this seller’s market.
The first thing you must do is “find” the home as soon as it is listed for sale. If you are working with a great agent, your agent will be searching for the right home for you every day and notify you as soon as one becomes available. As a buyer you can assist in the search by visiting the various real estate websites regularly. More importantly, you must be available to go see the listings with your agent right away. You must also be ready to write an offer and submit it as soon as the property becomes available. If you are an all cash buyer make sure you have your “proof of funds” ready to submit with your offer. If you are using financing make sure that you have your “preapproval” letter updated and available (get preapproved, not just prequalified). Make sure that you have reviewed and understand your Residential Purchase Agreement (offer/contract form) in advance and can sign and submit it the same day you see the property. If you cannot make arrangements to see a new listing right away you may wish to submit what is called a “blind” offer. It is an unfortunate fact that many sellers are now accepting blind offers, subject to the buyer’s inspection, just to end the negotiation/bid process. The key is to be diligent in your search, available to see homes at a moment’s notice, and be prepared to submit your offer right away.
Submitting the “winning” bid is the hard part. Forget about using comparable homes that recently sold to determine the value of the home. In most negotiations today there is an auction mentality and the bidding starts at the list price and goes up from there! The highest price and the best terms usually wins the contract. As a buyer you can write the best terms by writing what we call a “clean” offer. Allow the seller to designate the different services, do not ask the seller to pay for all of the various costs associated with the transaction, and limit your contingencies to only the basics. As for what price to offer my advice is simple. If you are a cash buyer offer more than the house is worth today, but less than you think it will be worth tomorrow. If you are using financing offer the amount that you feel the house will appraise for, plus whatever amount of cash you have to make up the difference between the anticipated appraised value and the offered price. If you are not the winning bid, at least you will have made your best offer possible.
Do not give up! With a little luck and by following these suggestions you just might be able to purchase a home in this seller’s market.
This week’s real estate tip: If you plan to purchase your home as your primary residence focus your shopping on the Fannie Mae, Freddie Mac or HUD foreclosure listings. These listings all have a 10 to 14 day period at the beginning of their listing where ONLY owner occupants can purchase them. This will eliminate the competition from the “all cash” investors.
Bruce Cathcart is the Broker/Co-Owner of La Quinta Palms Realty, “The Friendly Professionals” and can be reached by email at firstname.lastname@example.org or visit his website at www.laquintapalmsrealty.com.