Well… what do you think?

Picture it… Sicily, 1945… wait… wrong show.  Sorry. (You have to be over the age of 40 to understand that reference, sorry millennials!)

Picture it… Saturday afternoon and you’ve just been to an open house.  The sky is blue, the birds are chirping and the yards are perfectly manicured.  You’ve decided THIS is definitely THE one.  You sit down with your agent and decide to offer $10,000 above list price, thinking that guarantees the seller will accept your offer.  I mean, who wouldn’t accept an offer of $10k above list?  Right?

Well… not so fast.  Smart sellers (with the astute advice of a smart listing agent) are also looking for the most secure deal.

They’re looking at:

• Are you pre-approved and did you submit your pre-approval letter with your offer? Don’t even bother going out to look for houses if you’re not pre-approved.  In fact, your buyer’s agent shouldn’t even take you out until you have spoken with a lender.  Why?  If you’ve waited on getting pre-approved and this truly is a Saturday afternoon, how do you know how quickly you can get a pre-approval letter in your hands? (If you’re working with Fonville Lending, the answer is FAST!  But if you’re not… well…)  By the time you get the pre-approval letter in hand, another offer will likely come in and you’ll lose your dream house.  Don’t be silly and miss out on your future in your dream house.  Take the time and get pre-approved.
• What is your LTV (loan to value) ratio?  In other words, how much are you putting down on your loan? Why does this matter?  If you’re making a $10k offer above list price and you’re also seeking 100% financing, then the seller may be concerned about what will happen if the house does not appraise.  In this case, your $10k above list doesn’t make yours the most attractive offer. It may seem to the buyer that you may not have the cash to complete the transaction since you have 100% financing (i.e. the money to bring to the closing to make up the difference between the loan amount and the appraised amount…if you really want the house at $10k above list price).
• How much due diligence money* are you putting down? Why does this matter?  The more due diligence money you put down, the more skin you have in the game and the more serious the seller knows you are.  If you make a $10k above list offer but only $500 due diligence deposit, then they may consider another offer that is only $5,000 above list but with $1,500 due diligence money. (Please note, that $1,500 is purely example but… not unheard of in today’s market.  I am not saying it is necessary to put that much down in due diligence money.) Putting down $1,500 means you’re definitely more serious about the house.  Why?  In North Carolina a buyer can walk away from the deal for any reason or no reason at all during the due diligence period BUT you lose your due diligence money.  So you’re putting more skin in the game if you’re willing to risk losing $1,500.  A smart seller (with the wise advice of a smart listing agent) will be able to decipher the better offer and may reject the $10k above list with only $500 due diligence money.
• Are you putting down any earnest money* in addition to the due diligence money? Once again, how serious are you about this house?  While earnest money is easier to get back, it still shows how serious you are about the house.  Putting down earnest money in addition to due diligence money certainly makes your offer more attractive.
• Are you planning on asking for a lot of repairs? Some buyers believe that just because they make an offer of $10k above list price that the seller should make all repairs that are indicated on the inspection report.  Well, folks, I’m sorry to tell you that this just isn’t the reality that we are currently in.  Sellers are finding that many buyers in this market are willing to buy the house as is.  In fact, believe it or not, when you sign the Offer to Purchase contract, you’re already agreeing that “The property is being sold in its current condition.”  So… if you really really want this house, I advise you discuss things over with your buyer’s agent before making a lengthy repair list.
• Do you need to sell your house in order to buy this house? If so, yikes.  Contingencies are not unheard of, but it just makes your $10k above asking not so attractive anymore.  Remember, there will likely be multiple offers on the same home you want and the seller can easily move onto another buyer that does not have to sell their home (even if that offer is only a few thousand dollars over asking).

The current market conditions require that we all reset our expectations when buying.  Make sure you have a wise and trusted buyer’s agent by your side to guide you every step of the way.  You need someone on your side protecting you and that is the job of a buyer’s agent.

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If you are interested in finding out how I can assist you with your real estate needs, click this Calendly Link to book time for us to chat.

Relocating to the Cary area? Click here for the Cary Relocation Guide.

Thinking of selling your home? Click here for the Seller’s Guide.

Learn More:

• Click here to learn more about the Due Diligence Fee.
• Click here to learn more about the Earnest Money Deposit.
• Click here to learn more about the benefits of having a buyer’s agent.
• Click here to learn more about the benefits of having a seller’s agent.

Happy Home Buying & Selling In North Carolina!