John and Jane Smith are in love with a house on Arlington. The house is listed at $650,000, and they are approved for a loan in which they put 20% down, or $130,000. The house goes on the market at 10:30 a.m. on Wednesday morning. By the time John has called his Realtor, taken off work, gotten a babysitter for the kids, picked up Jane, and made the appointment for noon, there are already four other offers. The listing agent has agreed to take offers until noon on Thursday. Understanding that they need to put in their highest and best offer, and there will probably be no negotiating, John and Jane offer $690,000 with $10,000 earnest money. They write into the contract that they will pay additional cash at closing if there is a difference between the appraised value and the sales price. This could potentially up the amount of money they bring to closing to $170,000 or more, and they have to trust the market enough to believe that prices will keep increasing at a rate that won’t force them into a negative equity situation. This is not a day to be afraid.
As corporate relocations climb and foreclosures decline, Houston is facing the first housing shortage we’ve seen since the 80’s. The balance of supply and demand has tipped, and there are some happy sellers out there who, in some cases, are able to name their price.
On the flip side of the scales, home buyers are frustrated, down-trodden, desperate, or giving up. Every day that my team and I show property for a buyer is a challenge. The days of low ball offers and “deals” are gone. Multiple offers and missed opportunities have become the norm.
We’ve found that the most powerful tool we can give buyers in this market is preparation. If you’re going to play in this ballgame, you need an experienced Realtor to coach you through it. It’s not just a question of putting in the offer with the highest dollar amount, but the other terms of the contract are important, too, if you want a competitive edge.
Of course, the most important term a buyer can offer is the method and choice of financing. Clearly, cash is king. We’ve seen offers for a lower sales price with no financing beating more money if it’s dependent on a loan. In this new world where houses aren’t always appraising for the sales price, sometimes buyers have to get creative. Experienced listing agents are looking for buyers who are completely approved – this means that the lender has already checked income, credit, assets, debt-to-income, etc., and they’re just waiting to plug an address into the equation.
This is an exciting period of growth for our city, but as with all changes, we expect some growing pains. John and Jane embraced the change and understood what needed to be done to win. As a result, they recently moved into their dream home. If you’re ready to hire a Realtor to coach you through the process, whether buying or selling, call Mary Wassef at 713-398-8719.