The San Diego Real Estate Market is a very competitive one right now. We are in what is known as a Seller’s Market, not a Buyers’ Market. A typical Seller’s Market is when there is less than six months’ worth of inventory. A Buyer’s Market is when more than seven months’ inventory is waiting to be sold. There is currently 1.5 worth of inventory in the San Diego Metro communities such as North Park, South Park, and several surrounding neighborhoods. This means the inventory is very low, and many buyers are competing for the same home. How to write an offer to buy a home is crucial. Homes that are priced well receive multiple offers, and only the best offers will be considered.
What do I mean by best offers? The purchase price has to be competitive, but sellers are also looking at different things when reviewing offers.
Here are 6 tips on How to Write An Offer to Buy a House in a Sellers’ Market
Tip#-1– Must have a pre-approval- Before going out and searching for homes with your Realtor, you should have already spoken with a few mortgage lenders/brokers and picked the one you feel most comfortable with. Your Realtor should have a few great lenders that they will be able to recommend if you don’t already have one. They will let you know exactly what documentation they will need to be able to give you a loan approval right away. This is different than a pre-qualification. Having the pre-approval will let the Seller know that you have already submitted your application and documents to the lender/bank, and the Lender will approve your loan for the home. This tip alone will get you in front of the pack. The pre-qualification only means that the buyer spoke with a lender and verbally gave information regarding their income.
Your bank statement should be included in your offer showing the Seller where your down payment is coming from. This is what we call “Proof of Funds.”
Tip#-2-Find Out What Is Important to the Seller?
I have never met a seller that does not want the highest dollar amount for their home. However, there may also be other things that are important to them. Your Real Estate Agent should ask the Listing Agent about the following. Does the Seller need a longer or shorter close of escrow? Do they need a rent-back from the buyer? What this means is, do the sellers need to close on the current home and then rent the house back from the buyers for 2-3 weeks? If so, typically, the Seller pays the buyer for that time frame. You may offer to pay for this. This will be something of interest if they need extra time.
Tip#-3- Termite Clearance is not always a must
In a regular market with less competition, the buyer will typically ask the Seller to give them Termite Clearance. When competing with other offers, this may be something that you do not ask the Seller to pay for. It will make your offer look better.
Tip#-4-Include a higher earnest deposit
The earnest deposit is also known as a good faith deposit- We typically see offers where buyers will offer anywhere from 1%-3% of the purchase price as good faith deposit. If your offer is accepted, you will deposit that amount into the Escrow Company that is being used for the transaction of the sale of the home. They are a 3rd party company that holds all deposits and finalizes the transfer of funds from the bank. If for whatever reason, you were to cancel within your contingency time period, the escrow company would return your deposit. With this being said, if you have completed your inspections and removed all contingencies included the loan contingencies, you would risk losing a large portion of those funds if you then decide to cancel.
Tip#-5- Submit shorter contingency periods–
Typically the buyer has 21 days to do their home inspection and get full loan approval. This is something that a good Realtor and Mortgage Lender can cut down significantly. Home Inspection contingencies can be reduced to 10 days. This will depend on the loan and Lender. We work with lenders that can have a fully approved loan in 12-17 days. By working with an experienced Realtor and Lender, you would be able to cut these contingencies down, making you appear as a stronger offer.
Tip#- 6-Your Realtor should have your Lender reach out to the Listing Agent
As top real estate agents in San Diego, I can tell you that when we receive these calls from the buyer’s lenders, it shows us that the buyer’s agent and their Lender are working together very closely. We can ask the lender questions regarding what type of loan the buyers are applying for and their ability to qualify for the loan.
If you would like to speak to an experienced and dedicated Real Estate Agent on the McT Real Estate Group, please shoot us an email, text, or give us a call. We would love to help you find a home in the San Diego area.