In today’s housing market, the buyer has generally held all the cards. But that’s beginning to change according to a recent Washington Times article which says that Bethesda, Chevy Chase and other areas are starting to see some real buyer competition. This includes even the “slow movers” such as foreclosures and short sales.
Rather than increased demand, lower inventory is creating this situation, and it’s happening across a very broad range of home prices, not just the lower-priced homes. If only one or two homes are listed in a popular neighborhood, you’ll likely see lots of competing offers. As I stated in the article, sometimes buyers with little cash end up “competing against cash-heavy real estate investors, particularly for bank-owned foreclosures.”
The heat of the chase can often push a buyer to offer more than they can really afford. This can create financial problems down the road. If you start out shopping at the top of your price range and competition drives up the price, you could be out of luck for that property. The advice I gave in the article is that buyers should avoid getting caught up in the emotion of the moment and “establish a price that they feel comfortable offering and make sure they do not go above that cap.”
There are some ways to improve the chance of your offer being the one that’s accepted amid the competition. For the article I stated that buyers can “offer a higher earnest-money deposit” for this purpose. “A larger earnest-money deposit is only risky if you act risky. It is very rare to lose it. There are multiple opportunities to walk away from the contract without losing your deposit.” Generally, offering one percent of the sales price is customary in today’s market. It shows the seller that you are a serious buyer and enables you to write a contract as soon as you know what home you want to buy.
Some of my other recommendations to stand out as a buyer include having a strong relationship with your lender and using a personal touch. As I told the Times, “It can be helpful for the buyers’ agent to present their offer in person. Not only does this personalize the process, but the agent can also answer any questions or concerns and even make immediate changes to the offer with the permission of the buyer.”
So while buyers may not have the same clout as before, with a little extra vigilance and the help of a great agent, they can still stand out from the crowd in this market and hold the winning offer.
Contact me, Mynor Herrera, today for expert help buying or selling in the DC, MD, & VA areas! I also specialize in Bethesda and Chevy Chase, as well as the sub-divisions of Rosemary Hills, Rock Creek Forest, East Bethesda & Whitehall Condominium.
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