You have been out scouring the area you want to be in, walked through dozens of homes in search of the right one. Finally you find it, your dream home! You submit an offer and are looking forward to an acceptance or a counteroffer but instead you are hit with a “Multiple Bid Scenario – Please submit Best and Final Offer”.
What?!?
What this means is that other buyers have stumbled across your prized home and fell in love just like you did! Sometimes it is a foreclosure property, sometimes a short sale and sometimes it is a regular resale listing. Many buyers become very stressed out asking me how to handle it and my answer is always the same. “Best and Final” is actually what it means. The seller is looking for your absolute best and final offer, there will be no counteroffer, the seller will move forward with the best net offer on the table by the offer deadline. The offers of others will always be held confidential (sometimes so will the number of offers on the table).
In these scenerios it is crucial to know the comps of other properties in the neighborhood. In the event of a foreclosure, the property could be priced well below fair market value and the bidding could significantly increase the final sales price. For instance, not long ago a foreclosure hit my client’s radar hours priced at $114,000. After reviewing the comps I found that sales in that Powder Springs subdivision ranged from $189,000 – $260,000 and this particular foreclosure was the largest floorplan in the subdivision. We submitted an offer for $135,000 which was $21,000 OVER ASKING PRICE. Unfortunately we lost the bidding war. We found out later that the property sold for $164,000 – Fifty thousand over asking price. While that is not the norm, it is an example of how important comps are when bidding.
Normally, as detailed in a previous blog “The Skinny on Foreclosure Bidding”, multiple bid scenerios usually result in a final sales price at or above list price. With that being said, how do you know which number makes best sense for you?
I always tell my client to think about the number that they can sleep well at night knowing that they wouldn’t have paid 1 penny more for in the event they lost it. Nothing worse than a client coming back to me and saying “I know I bid $150,000 but I really would have gone up to $154,900”. In best and final scenarios, your absolute highest bid is what you should submit. If your submit best and final is truly that, there is nothing more you can do. Good Luck out there!
Most of the last 2 years made your typical “resale” listing the ugly stepchild of real estate. (Note “resale” is defined as a reselling of a previously owned home by a seller/home owner). The hot commodity of real estate since the downturn of the market has been the distressed market which is comprised of foreclosure, bank owned REO, pre-foreclosure and short sales. While April showers may bring May flowers, April will also bring a huge (albeit temporary) sell off in resale inventory!
There are tons of first time and return home buyers who have straddled the home purchase fence for months. Now that the tax credit deadline looms, buyers are becoming frantic! Short Sales are time consuming and this late in the game cannot be guaranteed a June 30 closing date to meet tax credit deadlines. With the influx of foreclosure offers, some banks are now taking WEEKS to respond to offers leaving many buyers worried that they won’t have enough time to find a back up property in the event their foreclosure bid loses.
Enter the beautiful position of the average home resale.
Sellers are available, motivated and ready to make it happen! A good listing agent has advised their sellers that it is do-or-die time until April 30, 2010. Today (Saturday April 17) I received an offer for a resale listing of mine at 1:09 pm and had it binding with a counter offer by 4:25pm. Definitely a refreshing change from the typical bank’s snail like pace and the buyer met the tax credit deadline! That makes THREE of my listings that have gone under contract this weekend and it is only Saturday afternoon!
Metro Atlanta (including suburbs) typical peak spring market runs from late January through Memorial Day weekend. With the tax buyers credit deadline (which said tax credit is not expected to extend) at the end of April, we may actually see an early end to what has really been an amazing spring selling season! Only time will tell however at this moment through the end of the month, resale sellers have become the belles of the ball. Enjoy this brief moment to shine and SELL, SELL, SELL!
As the deadline approaches for the First Time Home Buyer Tax Credit, many are asking whether the credit will be extended yet again. The answer looks to be NO!
The legislation was drafted by Georgia Senator, Johnny Isakson, who ironically spent almost 30 years as a Realtor. The last extension put in place required all first time home buyers to be under contract by April 30, 2010 and close no later than June 30, 2010 to receive the $8000 tax credit ($6500 tax credit for repeat buyers meeting qualifications). Senator Isakson told the GAR, Georgia Association of Realtors, that he assured Congress that he would only ask for ONE extension and this is it. He will not go back on his word and ask for a second extension.
For all home buyers (first time and repeat buyers) on the fence thinking this amazing tax credit will be extended, it is time to get down and take advantage of this amazing deal! There is a mini buying frenzy out in the market place right now on homes priced below market value so do not wait until the last minute or you will find yourself out of luck.
The Walker Derby Team has Buyer’s Agents ready to assist you in the following markets: Acworth, Austell, Atlanta, Canton, Dallas, Douglasville, Hiram, Kennesaw, Lithia Springs, Mableton, Marietta, Powder Springs, Roswell, Smyrna, Villa Rica, Vinings and Woodstock. Contact us for more information!
Today I received another lowball offer on one of my listings. The agent wrote on the cover letter that this was a CASH buyer, as if that would soften the blow. This made me realize that perhaps I should write a blog on why CASH is not king and break open this myth! So this is an open letter to all Cash buyers:
Dear Joe Q. Cash Buyer,
Thank you so much for your interest in my listing. I see you have cash that you want to purchase a home with, Congratulations! Sure it is nice that there is not a financing contingency attached to your offer, but what makes you think it makes your offer any better than the other offers I receive? At the end of the day it is all about the NET that the sale brings to the seller. This means:
Sales price – costs (closing costs, commissions, etc) = NET
Cash does not have any effect the net, all it does is make the closing possibly happen a little sooner. Curious how you find that is worth HALF off the list price? Just because you don’t have to qualify for financing doesn’t mean it is a done deal! We still have to get through inspection and your appraisal (if you want one), the soonest we could close is in about a week compared to another offer than will close in 30 days. At the end of the day the seller (whether a homeowner or bank) only cares about their bottom line. Neither myself or my sellers could care less if you have a loan or pay in cash, blood or pennies, what we care about is the net to my seller!
Respectfully-
JWD / Realtor Extraordinaire
On a side note, the risk of the cash buyer is that it is easier for a cash buyer with $250,000 in the bank to walk away from a binding contract losing their earnest money rather than a financed buyer who saved up for months for their earnest money deposit.
One real estate myth that I hear all the time is that buyers seem to think if they go directly to the listing agent (cutting out the buyer’s agent) that they will get a better deal on the home since only one side of the commission will be cut out. This is not always correct!
When a seller signs a listing agreement with an agent to sell their home, they agree to a set commission in which a percentage (usually HALF) would be payable “in the event” of a co-operating agent. What this means is that if a buyer contacts the listing agreement directly and does not have broker representation then technically the listing agent has earned the entire commission.
If you are a buyer and want to run the risk of no representation for a perceived lower sales price, make sure you do your homework! Be upfront with your request, not all agents will reduce their commission. I know of several instances where buyers were disappointed thinking they have negotiated the best deal and risked a lot of pitfalls only to find out at closing that in fact they saved nothing at all. Having an agent to represent your best interests in the largest purchase in one’s lifetime is a FREE service. Sure in the dawn of the internet age you can search for your own properties online, but are you familiar with due diligence (inspection) periods? What about financing and appraisal contingencies? If the seller’s agent is writing the contract I can assure you that the obligation of the agent is to look after the best interests of their CLIENT which in this case would be the seller.
The Walker Derby team has dedicated buyer’s agents who specialize ONLY in Buyer Representation. Contact us for more information!
