It has been a strange spring in 2015. The idea of Multiple Offers has resurfaced in the Central Ohio Region. Does this mean a Win/Lose scenario for Sellers (Winners) and Buyers (Losers)? Not necessarily.
There has been a lot of adjustment on the buying side this spring. People are having to regroup and understand the new fast paced selling market. Sellers are getting multiple offers in some cases within days after listing the property. What are buyers to do to win in this competitive market?
Escalating Clauses: I’ll pay X plus $1,000 more than any other offer on the table up to Y price. This allows buyers to beat other buyers’ offers as long as the Y price is more than competing offers…
No Remedy Clause: Do a home inspection; but, don’t request any fixes, unless there are major structural issues, from the seller. It gives the seller something less to worry about and you get to control the quality and chose who fixes the issues. Sellers are looking to leave. Who they choose to use to fix items inevitably will be the cheapest possible.
No Home/Gas Line Warranty: This is money in the seller’s pocket, which will net the seller a little bit more.
No Closing Costs: Asking for closing costs is asking the Seller to take a hit with their net profits.
Cash Offer: Cash is King. It will trump most any offer on the table as long as it’s a fair offer.
No Home to Sell: Anything new to the market is not the best thing for someone who has a home to sell. Those sellers are not going to take a second look at a buyer who has a home contingency. If you have a home contingency, your best bet is to look for homes that have been on the market for a while because they are slightly overpriced.
Higher than Anticipated Earnest Money: Putting your money where your mouth is… If you absolutely have to have a home, then use Earnest Money to do your talking, with conditions that are favorable for the sellers. You need to be able to make your own criteria/conditions that you put in place to keep the Earnest Money and be willing to take a calculated risk.
Someone said to me once that negotiations are not about getting the most out of something but getting the person to hesitate and think. In this environment it is not getting the most off the list price, it is about beating out the rest of the competition by getting the seller to hesitate and consider your fabulous offer.
Yes, the Columbus Real Estate Market is having a resurgence. Yes, people are having multiple offers. No, a seller is not going to sell you their house because you are afraid of “overpaying” and the seller needs to sympathize with the buyer’s side of the story.
I don’t care how well I write or how much sympathy I can elicit about a buyer’s plight; a seller is only going to be motivated by the green dollarydoos you bring to the table along with a strong contract. This is a competitive market. They may be persuaded to take less with a rather strong offer, but not $15,000 to $20,000 less. Period.
Yes, there are those really, really rare cases where a deal can be struck because the seller has other motivating factors besides money that are driving them to sell. Rare is not even the word. Slim to none and slim just walked out the door.
It’s so disheartening as a Realtor to have your analysis questioned. I do not put an analysis together for my own health or to “trick” the buyer into paying more. It is done with a critical eye on the current market conditions and is sensitive to the subject property’s surrounding area. Yes, the market changes and fluctuates, but not monthly, weekly, daily, or hourly. However, we have had a strong market in Columbus even during the bubble, which by the way has been popped for five years now.
If you can not trust me to look out for you; then, I’m not the Realtor for you.
I really feel like I need a blues band in Midwinter in recent years to effectively convey the status of the market and of the buyers. “Where are the homes?” Da Da Da Da “I’m in contract and nothing is available” Ba Ba Ba Ba “Come on bring the new homes to see…”
Yes, we have a massive buildup of pressure coming and it will avalanche in about late March to April. Then there will be a frantic array of sound and frenzied offers flying and things will be normal until Winter comes again… I cannot blame the sellers for holding their product for the best time available or because it’s just not the right timing for them personally. It is a complete switch from five years ago…
Switch from 5 Years Ago
I believe the number of months supply of inventory really tells the story effectively. As you can see from the graphic reports from Columbus Realtors, 2010 had a 13 month supply vs a three month supply in 2015. It is a night and day difference. Months supply means that if all things being equal all the inventory could be sold in x amount of months. In 2010, all the inventory could have been sold in 13 months. In 2015, it is three months.
What does it mean? It means that pickings are slim. The desirable homes are going to go quickly with all of this pent up buying pressure. It is a practice in patience and perseverance for those out looking for a new home. It all will happen at the right time and for the right reasons.