If you are like most buyers today, then you have experienced trouble with the lack of inventory. Because of this studies are now showing that buyers are going back in time to the day when you would hear through inside resources (friends, families, friend of a friend, etc.) that a home is going to be for sale.
On the flip side, many sellers are still hesitant to put their home on the market. Even though sales are up, and it looks like the market is turning around, unfortunately, there is still truth to what a home can sell for versus what you may want it to sell for. As a result many potential sellers are waiting in hopes that values will rise and then they can list their property for a more desired price.
Now because of the lack of inventory, buyers are starting to jump on homes that they hear through the grapevine are going to go on the market. And these are homes that buyers are scouting for, looking for that dream home in hopes that they will go on sale. Whether its by noticing a dumpster in front of a home, or the looks of renovation when property has been empty, etc. So some buyers are offering intent to buy on these homes before the listing contract has even been established!
Working with a Realtor who is very familiar with the area and market you are looking for helps. The Realtor will know through their colleagues if a property is in the “shadow market”. They can go to seller with an offer before it hits the MLS. This is becoming more common, good properties are hard to find, so the good ones, once they hit the MLS already have multiple offers on the first day!
Now my only precaution to you would be to make sure you do your due diligence and seek an estimated value of the property because you don’t want to “over bid” on a property. This could create the problem of the appraisal not coming in at value (purchase price). If this happens and you still want the property and the seller is not willing to lower the purchase price, then you have to come in with the extra funds above your down payment! For example, if you bid $130K and the home appraises for $125K then you would have to add $5k to your down payment, this can not be financed into the loan. So if you are not prepared for that then be prepared to walk away from the deal.
We recently had a client in which this scenario did happen and fortunately I was able to “save the day” with some savvy lending know how (secrets in the sauce). Now this can’t happen all the time but again we were just fortunate to make this work. Another reason why it is important to choose a good, trustworthy lender to help you through the process. Make sure your lender has your best interest as their priority!
If you have any questions please feel free to call or email me. If you would like to get pre-approved please call our office or you can complete a secured online loan application.
Summit Home Mortgage
303-779-0591 ext. 101