I’ve held a real estate license for 20 years and have never faced such a competitive seller’s market as the one in North Metro Atlanta right now due to the combination of historically low interest rates and tight inventory. We are seeing time and again ‘A+’ to ‘B+’ homes going under contract in as little as 1-3 days. If you’re okay with a fixer upper or a home that is not considered ‘move in ready’, you have more flexibility. If not, these tips are for you.
We tell all our buyers to put their game face on and get ready to be QUICK and AGGRESSIVE. This market is not for the timid and frankly I have had to up my game as well. I like to take my time and analyze a decision thoroughly before making a move. Nope, not in this market. Act first, think later (don’t worry, there are safety nets). When you see a home come on the market you really like, call your agent immediately. You should be set up on a search that allows you to see homes become active in real time…if you’re on Zillow you’re behind the curve. A good agent will give you access to the same search engine Realtors use.
Schedule a tour of the home asap, same day if possible. If you don’t move to see an ‘A’ property quickly, your agent will need to call to make sure the home isn’t already under contract when your schedule opens up.
Testimony: Our client sent me her list of 10 homes she wanted to see and I noticed some of them were showing as active for longer than 3 days. Since sometimes agents don’t immediately update the listing sites, I knew to call and confirm. 8 out of 10 were already under contract and the remaining 2 were ‘C’ properties. Moving forward she knew to act quickly and we found the perfect home for her and her family a couple weeks later.
Therein lies the ‘quick’ part of my recommendation. Next comes the ‘aggressive’ part which may be a little challenging for some. When an ‘A’ property meeting your criteria comes on the market (even more so for the rare ‘A+’ unicorn home), you decide to make an offer. Great! How much over asking price are you willing to go, because a bidding war is about to begin.
Testimony: Our clients put in 2 separate offers on’ A’ homes and increased their price by $5,000 each over asking price, however both times stronger offers came in from other buyers. The third home was the charm, more of a B+ property so they didn’t need to be as aggressive. A client we started working with today asked me to check on an ‘A+’ unicorn home. It already had 9 offers submitted, one which was 10% over asking price and still wasn’t the winning offer. This market can be brutal!!
Unfortunately, some buyers experience regret losing their first choice in a home. Keep in mind every $1,000 added to your mortgage on a $300,000 home is only going to increase your monthly payment by approximately $7 (confirm the exact amount with your lender). Ask yourself if your first choice isn’t worth $35 more per month (less than the cost of a gas station coffee per day)?
Here come the safety nets, a couple tricks of the trade that can make this decision easier. The first is the appraisal. Don’t worry about buying a home for more than it is worth because that is the appraiser’s job. If the home doesn’t appraise, the seller will have the option to lower the price (assuming you don’t agree to pay over the appraisal price) or they can refund your earnest money and hope an all cash offer comes in. In our experience, most sellers lower the price of the home to match the appraised value because they want a quicker close.
Another means to aid you in a bidding war is something my husband (Tony Morris, the founder of The Meridian Real Estate Group) isn’t thrilled I’m about to share as not all agents employ this. You can add an ‘escalation clause’ to the contract. In effect it states that you are willing to increase your original offer by a set amount to surpass any other bona fide written offers up to a designated cap sales price (eg your original offer is $350,000 and you include an escalation clause to increase by $1,000 over the highest offer, up to and not to exceed $360,000). You can rest assured that the other offer will be bona fide as a Realtor would risk losing their license if they lied. Real estate law is quite serious when it comes to shenanigans by shady agents.
And the ultimate quick and aggressive move? Putting a competitive offer in on a home before you have toured it. Most contracts have due diligence periods which essentially states that you have a set amount of time to make sure the home is right for you. This ranges from 7-14 days and allows you to have all inspections completed and to get any estimates from contractors on work you might want done after closing. If at any point during that window you decide the home isn’t right for you, for ANY reason, you can walk away and get your earnest money back. The earnest money you put down doesn’t have to be physically turned in until 2-3 days after the binding agreement date as well. This means if you are unable to view the home as soon as it comes on the market and you and your Realtor recognize it is an ‘A’ property, you can still be a contender as the future owner.
Now that you know tools to wield in order to crush this seller’s market, make sure your real estate agent is as aggressive and motivated as you are or your efforts may not be enough.
The ‘A+’ unicorn home I mentioned that went under contract yesterday? The buyer was using Zillow as her search engine and the agent she was using didn’t return her phone calls in a timely manner. Now she’s with us, and GAME ON!!!
Good luck and happy hunting!
By Holly A. Morris, Realtor