Hey there Sacramento peeps!
Have you made offers to purchase a home recently, yet had a difficult time getting under contract?
Or maybe you’re frustrated with the process because you have been outbid on every offer you made. So frustrated in fact, that your home purchase was put on the back burner…
You think to yourself… ehhh… maybe in 2019 the market will calm down and then I will buy.
It’s Irritating, I know….
As if it’s not stressful enough making the decision to purchase, getting a loan lined up, and making offers. Isn’t shopping supposed to be fun?
Well, here is some good news!
Sacramento County has seen a slight rise in the amount of property that is being listed for sale (see image below from Trendgraphix). Increasing inventory is giving buyers some extra breathing room.
Plus, there are ways to stand out among other bidders in a multiple offer situation and secure the winning offer.
The following 5 rules will stack the odds in your favor and help you go from tenant to homeowner much faster.
Rule 1: Gather Intel
This is a super critical, yet often skipped, step. After deciding that you would like to make an offer on a property, it’s time to ask some questions and have your agent hunt down the answers.
Here are a couple useful questions to get the juices flowing:
- Why are they selling?
- Is there anything specific the seller is looking for? (I.e. closing timeframe, inspection periods, etc.).
- Are there any inspections you are able to forward?
- Any known defects or maintenance issues that we should be aware of?
Seeking this information early in the process does two very important things… 1) It shows the listing agent and seller that you are serious about the property and interested in offering, and 2) Provides you with valuable information that can be used to help structure an offer that will appeal to the seller.
Rule 2: Structuring the Deal
Now that you and your agent have gathered some basic information from the seller, you can determine the best approach to structuring the deal. Of course, every deal is unique and different so make sure to discuss strategy with your agent. But, just for fun, let’s look at an example deal.
Example deal – Seller provided information
- The seller is retiring and moving out of state
- He is not in a rush to close because he already has his living situation lined up. He is more concerned with how committed the buyer is to purchasing and closing the deal.
- No inspection reports available from the seller at this time.
- All major alliances in good working order, new roof installed 5yrs ago.
With this information, what could you do to stand out?
Well, there are a couple things…
- Request a 30 day close (and mentioned that you can accommodate a different timeline if needed)
- Instead of a 17-day inspection period (standard in CA per contract), opt for 10 days to show you’re serious.
- Increase the earnest money deposit to 2% of the purchase price (instead of 1% – common in Sacramento)
- Perhaps you could offer to purchase “As-is” (meaning, you will take possession of the property in its current condition).
This is not an all-inclusive list by any means, but the point of gathering the intel is so that you can turn around and propose a win-win offer that will not only help you close on your dream home, but it will also appeal to the seller.
Rule 3: Full and complete purchase agreement
This rule is for your agent… fill out the entire purchase agreement and all applicable addendums. Make sure the listing agent’s information is completely filled out and accurate. It looks professional and makes the best impression when presenting the offer… no hand writing please, just one clean PDF copy.
Rule 4: Pre-Approval
Getting pre-approved early in the process is highly recommended. If you put yourself in the sellers shoes (or even the listing agent for that matter), they will simply take your offer more seriously knowing you have discussed your financial situation with a lender.
Here are some tips:
- Get pre-approved with a local lender – This will put the seller and listing agents mind at ease knowing that the lender can be reached easily.
- Make sure you provide all necessary documents early in the process. Allow ample time for the lender and/or underwriter to review them (approx. 1 week). This will help prevent any last minute surprises.
- Review rates & fees before making offers so you know what to expect and you can plan accordingly.
Rule 5: Proof of Funds
This one is fairly self-explanatory. Proof of funds is important because it shows the seller you have the funds necessary to fulfill the purchase contract that your agent is presenting.
If you are bringing a 5% down payment to closing, then show your account(s) that has those funds available. If you are drawing from a retirement account, provide a copy of the most recent statement.
As a side note, you do not need to provide all pages, and you do not need to show account numbers. White out the account numbers and pertinent info… then just provide the first page that shows the account balance. This is more than enough to show your level of seriousness and commitment.
Summing it all up
According to Trendgraphix, Sacramento County currently has 2.2 months’ worth of inventory (As of 12/10/18 – See image below). This means that we are still in a sellers’ market (anything less than 3 months of inventory).
Despite mortgage rates inching higher and seasonal shifts bringing more property for sale, the market has remained relatively stable. On the plus side, slightly higher inventory over last year is creating some flexibility with sellers… great news for buyers.
Still, if a home is priced right and is squeaky clean, it is not uncommon to be competing with multiple offers. Use these 5 rules to set yourself apart from the rest of the crowd and negotiate a win-win deal for yourself and the seller.
Happy house hunting!
All the best!
Want to buy, sell, or invest in real estate?
Silva Realty Team can help!
We cover Sacramento & Placer County in California with a special focus on Roseville, Rocklin, Loomis, Penryn, Lincoln, Newcastle, Orangevale, & North Natomas (Sacramento).