This month I will go over some of the recent trials and tribulations we have encountered working with Austin home buyers and helping them in the competitive environment we are seeing when looking at homes for sale in Austin.
Recently I helped an Austin home buyer searching for properties in Southwest Austin. His search included Circle C, Shady Hollow and Granada Hills. We even put out offers on a home for sale in Dripping Springs. The market in these areas is very hot, particularly in Circle C. The biggest competing factor for placing offers on these Austin homes was that the offers that beat us out were primarily from cash buyers. That makes it hard, but not impossible, to compete. We were competing against cash buyers and we had to pull out all the stops to make our offer more affective. Below are just some of the methods Spyglass Realty uses when helping a buyer in a competitive situation.
Get to Know the Austin Real Estate Market The first thing you need to know is the market. Just like when helping Austin homes sellers, we do an analysis of the neighborhood, which includes a comparative market analysis as well as a probability of selling. The probability of selling statistic analyses the amount of homes sold in the past couple of years compared to the homes that did not sell (the expired and withdrawn listings). This gives the buyer an idea of how likely the property is to sell at the offering price and allows him to strategize a reasonable offer.
What we are seeing in most Austin proper neighborhoods is that Austin homes are selling at or above list price. This is because demand is much higher than inventory. So how do we give our clients an edge up compared to other Austin realtors? Aggressive offers that still allow our buyers to complete their due diligence period.
Write the Contract with Aggressive Terms We start by offering a lower-than-normal option period at a price that is more than the average Austin realtor normally puts on their offers. For those who don't know, the option period in Texas is an inspection period. For an agreed upon amount, the buyer get's the unrestricted right to cancel the property for any reason during that period. The average agent in Austin typically puts their option period at around $100 for 10 days. Because we have our inspectors on stand by, we are able to put the option period at 5 days and have plenty of time to get the inspector out to look at the property. We also double or triple the amount we pay for that time period, letting the seller know that our client has some real "skin in the game". If you really like the property, putting two or three hundred dollars up to evaluate it is not a big amount. Especially considering that if you proceed with the purchase, the money you put up is credited at escrow.
The second thing we do is to increase the earnest money amount from the usual amount sellers are used to seeing. The average Austin realtor puts 1 percent. We increase this amount to 2 or even 3 percent.
Be Approved instead of Pre-Qualified Next we put the financing period (the time in which the buyer has in which to secure the loan) at an aggressive 10 days or 14 at the most, depending on the comfort level of the buyer and the loan officer. Again, the average Austin realtor puts this at 21 or more days. Because we have our clients pre-approved as apposed to pre-qualified (the difference is that the lender has verified income, assets and debt ratio) BEFORE we even look at properties, we don't need as much time to get qualified as other Austin real estate brokerages. Now in order to do this, it's important that the buyer gets all the information that the lender asks for as soon as possible. Also, for this to work, it's important that the buyer is working with a lender that we trust. This will never work with one of those Lending Tree lenders. We have two lenders that we refer to that we absolutely trust. I cannot tell you how many times I've been burned when the buyer comes to me with their own lender.
Make Sure Your Agent is Actually Speaking to the other Agent Last but not least we have to be able to articulate all this to the listing agent. It may seem obvious that the buyer's agent needs to make a phone call to the listing agent and explain the merits of the offer to them, but you would be surprised. Every Austin home we have put on the market this year has been in a multiple offer situation and more than half of the offers I have received have been through email without an accompanying phone call to go with it. It would seem to be a rookie move but you would be surprised at the agents (and their years of experience) that submitted them.