Ron Henderson President/Broker of Multi Real Estate Services gives advise on how to survive a multiple offer real estate purchase April 12, 2013. The Los Angeles and Ventura regions are extremely low in sell-able housing inventory, and multiple offers are the norm.
It is the April 12, 2013 and our real estate market in the Los Angeles region is hot… too hot. Unless a property for sale has real issues, or radically overpriced, they’re receiving multiple offers within days or many times hours after hitting the market.
This is being caused by a pent up buyer base, and a dangerously low inventory condition. A lot of this buyer seller imbalance is caused by big investor money buying bulk REOs directly from lenders, and basically targeting anything in the primary Los Angeles Ventura region.
Even though property values are up from their lows, it’s still a great time to buy real estate. Remember, a rising tide lifts all boats. everything goes up in an overheated market, but the better areas always will appreciate at a higher level, and retain their values better when the market falters. Buy the best areas you can afford.
If you are trying to purchase a property when you know there’s going to be multiple offer scenario, here are some things to consider to help you potentially be the chosen one.
Be prepared before you see a property – Proof of Funds, Pre-Approved for a loan, Good representation. Nothing is more frustrating than you find a property you want, and the property sells before for can get your act together.
Know the market-Find the right property, move fast (don’t be left behind), Pull comps-Difference between appraisal and market value.
Make a clean offer with best possible terms-be creative, Things offer tight inspection time frames, allow a short term seller rent back w/short escrow for O/O house. That may entice an owner occupied seller to go your direction.
Cash will beat high LTV offer-Try and come in with the best purchase terms possible. High LTV offers are thrown out because astute listing agents know appraisals are going to be an issue. Optimally, if you come in with a high LTV loan, you can show additional cash capabilities, eliminate the appraisal contingency, and be prepared mentally and financially to make up the difference in purchase price and appraisal value in additional down payment.
Pricing, Be aggressive- Face it… Let it be a Corporation, investor, or a standard seller, they all want the most from the sale.
In this market, you can’t take your time, you’ll bechasing the market and the pricing up (buy sooner than later)-You may not want to over pay for a property, but in an overheated market, sold comps are obsolete almost immediately. What appears to be overpriced today, may appear to be a deal tomorrow.
Be cognizant where the market cycle is at. Don’t the last one in the pool. You’ll get hurt. Worst case scenario, you’ll buy in the future at higher price, higher interest rates, and be dealing with tighter loan underwriting guidelines, than we’re dealing with today.
Follow up asap to counter offers-Don’t play games. Seeing 20 or 30 offers for decent properties right now is typical. In this market, if you find a property you really want, be prepared to go battle, otherwise you’re wasting your time. Understand, if there are 30 offers, there’s going to be 29 disappointed buyers. Learn from the information I just gave you.