Make A Successful House Offer In A Hot Real Estate Market
Hot markets have quirks you may not expect right now as a first-time home buyer. You should consult a lawyer or a realtor to get the best advice about making an offer in any specific location. In the meantime, here are the basics about making a successful offer in a hot market.
No Matter What, You May Have To Make Multiple Offers
In some markets across Canada, making 10 or more house offers can be normal before one is accepted. There is some attrition of buyers after that much process with no results. The market here in Alberta is not as hectic as in Vancouver, Toronto and Southern Ontario. However, you may participate in multiple offer scenarios and should be prepared to have offers turned down.
If you hit some roadblocks, stay focused and continue making offers on great houses. If you make a lot of offers and none of them stick, maybe readjust your strategy.
How Do I Know If I Am Making The Right Choices In A Competitive Real Estate Marketplace?
You have two options when making offers on real estate. First, you can use a realtor to show you properties, offer market advice and draft your requests for an all-inclusive fee from the house seller’s end.
You can also draft offers privately with a lawyer and rely on the owner or listing agent to show you the houses before the offers are put in. This would leave you to determine fair market value on your own. That’s a tough job for the average person.
Drafting a single offer with a lawyer for a private sale would be much cheaper than involving a professional realtor, but it will come with less market advice. Also, consider that if you write 12 offers to sellers using a realtor, you using a lawyer will be more expensive.
You probably want a realtor if you need advice about home values and offer etiquette.
Please note, whether you draft offers with a lawyer or realtor, you will still require a lawyer to transfer the title to the land and complete the transaction.
What To Do When There Are Multiple Offers Already In Place
Some professionals in many marketplaces have a rule of thumb to determine what a bid should be, considering the number of other sealed bidders. Remember – offers are private until the deal is firmed up or completed, depending on the jurisdiction. For instance, the calculation may look like this: offer = asking price + (5,000 X number of other offers).
Suppose you find a house in a hot housing market and are confident that you don’t want any house but that one; your best bet is to offer the maximum amount you can afford. That way, if it is possible, you will get it.
If offering more is not an option for you, perhaps you should consider looking in a lower price range than you have been until now. That way, you can offer more than the seller’s other bidders. That is a great way to change yourself into a bigger fish in a smaller pond and throw your weight around for better success.
Should You Make An Offer With No Conditions?
Many people make unconditional offers during a hot real estate market. This is best done by people with the capacity to pay for the property with 100% cash savings.
It is possible to make an offer with no conditions with a mortgage pre-approval. However, this is not always advisable. When interest rates change, it can end a mortgage pre-approval without notice to you but leave you on the hook to pay the seller.
If you make an offer with no conditions for mortgage approval, inspection or other things, you will be on the hook to come up with the whole amount at the appointed time. If you cannot do so because your lender changed their rules, you will lose your deposit and could face litigation. A realtor could advise you on what conditions to include in your offer.
Contact The Mortgage Group Inc in Calgary for mortgage pre-approvals, so you can responsibly start your search in a hot real estate market. (403) 571 – 8142