Making an Offer on House in Today’s Hot Market

Improve Your Odds When Making an Offer in Today’s Hot Market.

This page is one of several on Home Buying. Be sure to see the First in Series on Home Buying and the following one on What to Offer on a house.

A year ago, back when real estate was normal, homes were on the market on average ~90 days (DOM = 90). A buyer had plenty of homes to look at and plenty of time to make an offer. You could take your time and compare a lot of houses before finding your dream home.

AMaking offer on Brooke Smith  house

Archer St in Brooke Smith DOM=1

You made an offer only after doing careful research, looking at comps, looking at sales history of the homes, looking at Days on Market, etc. If the house had been on the market >60 days without a price change, it was over-priced and you could make a lower than normal offer.

A typical offer (if the house was price right) was ~5% off list price; lower than this if you could justify the lower price.You then negotiated price to something between offer and list price.  Back then the average sales price was 2-3% under list. See my Page on starting out House-Buying

I used to tell people that house hunting should be fun. If not, you were doing something wrong. Well…it’s not fun any more. House-hunting for Heights homes (and any other close-in neighborhood) is not fun. It is scrambling every day to be the first to see and make an offer.

The new reality:

  • No more looking at properties a week after they come on the market. You look at them in the first few days, if not the first day!
  • No more multiple visits to see it again.
  • No more days of agony and thinking it over.
  • The average DOM (Days on Market) is now 30, but half of the homes sell within 10 days. So…He who hesitates is…

If the house is cute, clean, updated, desirable and you like it…other will like it too. And the others might have been looking for months and are ready to jump on it. If you like it…make an offer!

Now that doesn’t mean you make offers willy-nilly. It means you do your homework; you are familiar with homes in your neighborhood and your price range. You KNOW (with your Realtor’s help) if it is priced appropriately and fits your needs.

How much to offer? That is the big question. Remember…if you love the house, others will too.

Things to look at: Has it been on the market for a week or more (doubtful if cute and priced right)? Did it just come on the market today? Are there other offers on it? Is there something quirky about it, that others may not like, but you are okay with (you are in luck..your odds just improved.

How much to offer? I cover this on another page. It’s a little complicated, but remember to look at both price and terms. Price used to be foremost, now other parts of the offer are critical.

Cash is King…that term is still correct. If someone is offering cash, and you have to get a loan, cash typically wins. The seller doesn’t have to worry about loan approval, appraisal (especially if offering above list price), a 30-45 day closing period. Cash deals can close in a week. Luckily cash deals account for only 10% of deals.

Besides price, things to consider in making your offer:

  • Down payment… a larger down payment gives seller more confidence
  • Time to close…this can go either way. Maybe they want a quicker close, or maybe they are waiting for their new home to be completed and a longer close would be better; or even a lease-back. Find out what the seller prefers.
  • Option period…10 days used to be standard. Faster is better though. If the market is hot, they don’t want to take it off the market 10 days. Make it 5 days if you can get your inspector out immediately.
  • Do you have a contingency (you have to sell your house first)? If so, you must convince the seller your house will sell quickly too. This is too complicated to cover here.
  • Back-up offers? I had never recommended them in the past. Now sometimes it makes sense. If the contract falls through, at least you are next in line, not back in the mob competing again.

So, ask a lot of questions of the other Realtor and find out what the sellers wants, then try to make your offer attractive to them. One last thing… always write a cute bio of yourselves. Tell about yourselves, why you like the neighborhood and why you LOVE the house. Sellers are emotional too. If two offers are similar, they might like you better.

As always…good luck!