It’s a mad, mad world in the Orange County real estate market right now, particularly if you are attempting to purchase a home. A lack of inventory has produced a spike in multiple offers. How can you possibly differentiate your offer from the other bids the seller will be considering? First, have your Realtor contact the listing agent to determine the seller’s most important considerations. If the seller’s sale is contingent on the successful purchase of their next home the closing timelines may be of primary importance.
I represented a family who was selling their home in the Pheasant Run tract, north of Ellis Avenue and west of Ward Street. They received three offers on their house. Each of the three buyers had accepted all the terms of the seller’s counter offer. Just as the sellers were on the brink of making a decision the door bell rang. Mom and dad buyer with two baby buyers expressed how much they loved the house. They said it was important for them to raise their children in that neighborhood on a cul de sac with excellent schools. The sellers had reared their five children in the house and felt a kinship with the family. They sold them the house. It’s often helpful for buyers to write a letter to the sellers stating what features they love about the house and why their house/neighborhood won out over other possibilities. Enclose a photo with the family pets. Many sellers want to ensure that their home will be loved and appreciated. A letter and photo humanizes your offer.
If you are in competition with other buyers, consider removing the appraisal contingency. Be advised that once you remove that contingency, if the home’s appraised value comes in lower than the purchase price, you will pay the difference. All indications are the bottom of the market is behind us. Prices will appreciate this year and historically low interest rates will remain in effect throughout 2013 and possibility through 2014. Are you willing to remove the inspection contingency in ten or twelve days rather than the contractually defined timeline of seventeen days? Most lenders require a minimum of twenty-five to thirty days to complete a purchase loan. Obtain full underwriting approval prior to submitting your offer to the seller. It may tip the scale in your favor.
Many buyers are offering twenty percent or more down payments, that fact makes it particularly difficult for FHA (with 3.5% down payment) or VA loans (sellers pay some costs) to get accepted, however it happens so don’t get discouraged. Don’t let the fact that the seller has cash bids on the table intimidate you. I’ve seen some sellers toss out the cash offers in favor of loans if the other terms are appealing.
Are you willing to waive the termite clearance? Put it in writing in the contract, that may save the seller anywhere from $1,000 to $5,000. Check with your lender as some require termite clearance prior to close of escrow. Instead of requesting that the seller pay for a one-year home warranty, pay for it yourself. It will cost approximately $365-$550 depending on whether or not you include pool, spa, refrigerator and/or washer and dryer. The seller may reject the offer outright, accept your offer or issue a counter offer. The counter offer may not contest the price but may address other terms of the contract.
If you find the house you want, do not complicate your offer by asking for extras such as the flat screen televisions, the refrigerator etc. You can negotiate those items with the seller during the escrow period. Remember when sellers paid all or some of the buyer’s closing costs? Those days are in the past.
The buyer and seller each pay their own escrow fees. The seller normally pays for the title policy which indicates whether there are liens, judgments or encumbrances on the property. These are referred to as “clouds on the title”. The transfer of property should never take place with clouds on the title.
The buyer normally pays for the appraisal, credit reports, lender fees and any home inspections. I have indicated the most common disbursements however there are areas on the purchase agreement where other terms can be stipulated. Your dream home does exist but it may take more give than take to make your purchase a reality in 2013.
Susan Saurastri is a Fountain Valley resident and a Realtor with Star Real Estate. Contact her at 714-317-0664 or SusanSellsOCHomes@gmail.com