Q: My wife and I are trying to buy a house in Fairfield County, Connecticut, and we keep losing bidding wars. We offer above the asking price, but we cannot pay in cash. How much do we have to offer to get a house? Is there a magic number or is it a pipe dream and we will never find one?
A: You are deep in a seller’s market so any home at a reasonable price will face serious competition. Just compare the first quarter of 2021 to the same period in 2020 in Fairfield County: home sales rose 43 percent and listings fell 57 percent, a record decline, according to a report by Douglas Elliman. This narrative is repeated in markets across the country.
"It's a trial by fire where the buyer learns through pain that they don't have as much control as they thought they have," said Jonathan J. Miller, president of valuation firm Miller Samuel and author of the Douglas Elliman Report.
Jennifer Thomas, a licensed sales clerk with Metalios Group in Greenwich, Connecticut, said that the highest bid in her market is typically 10 to 15 percent above the asking price. But not always. "I had winning bids and we weren't the highest," she said. "It's not just about your price, it's also about your terms and conditions."
You probably know by now that you should be pre-approved for a mortgage before you bid, and that buyers who can waive contingent liabilities (or pay cash) have a distinct advantage. Discuss with your wife which eventualities you would like to forego, e.g. B. for an inspection or assessment. For example, if you forego the contingency of the valuation and the home values less than your listing, can you increase your down payment to make up for the mortgage shortage?
There are other ways to sweeten your offering. Ms. Thomas often speaks to listing agents to find out which terms are most important to the seller. Perhaps the seller wants to close a deal quickly. If so, do the inspection before your listing is even accepted to show the seller that you're moving with lightning speed.
Another strategy: try to find houses before they hit the market and ask your broker to research on your behalf and put out feelers wherever they can. Submit your request to local neighborhood groups to see if a seller will speak to you before the home is listed (a friend of mine only did this last spring and ended up finding a home that was never on the market came) and patience, you will find someone willing to sell their house to you.
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