Bidding With Multiple Offers: The Smart Way

Most real estate markets are picking up and the Minneapolis market is no exception. The housing affordability index is high and home buyers have been waiting to jump into action. With the shortage of good inventory however, there are more buyers than suitable properties, and we are seeing some multiple offer situations.

Multiple offer situations can cause buyers to make hasty and sometimes irrational decisions. The first piece of advice for buyers is to relax, take a deep breathe, and don't worry too much about the other offers. There will be some competition for the house, don't let it pressure you into making an offer, especially if you're not ready. You might find that you will have to write an offer sooner than you thought. If you are comfortable with the house and the situation, move forward.

Only pay what the house is worth to you, and only pay what you are comfortable paying. You don't know what the other offer or offers may be, they could all be "low ball" offers! There are many different scenarios that could happen and you may be the most attractive offer for many different reasons. Focus on the negotiation of your offer, don't worry about the other buyers, you aren't working with them, you are working with the selling agent. If you are serious about the house, put your best foot forward with your earnest money deposit. It shows the buyers you mean business!

Final piece of advice. If you finally find the house you have been looking for and you have to compete with other buyers, you don't want to have any regrets. Would you like to find out that you missed by $500 dollars? would you have paid $1000 more to get it? If you don't end up with the house, at least you know that you gave it your best effort.

Written by: Brad Novy

Price Gains Lift Homes Above Water

Rising home prices helped lift 1.7 million homes above water in 2012 according to a report released by real estate data and technology firm CoreLogic. As of December 31st, one in every five homes were still underwater. CoreLogic believes that another 5% increase in home values would lift an additional 1.8 million homes into positive equity. Home owners who were thinking about selling held off because of their negative equity positions, this forced our inventory to minuscule levels, and in turn helped home prices rise. Now that we are seeing the prices go up, we should see an upswing in inventory, as previously underwater home owners are more prone to sell.

Written by: Brad Novy

When Will Spring Come!?

Does this Minnesota winter seem longer than normal? Well that's because it has been! The average temperature for this time of year in Minneapolis is in the mid fifties! This drawn out cold weather is not slowing down home buyers though! Spring is one of the busiest times of the year for home buying activity, the low inventory levels are driving some competition in the marketplace! If you are buying a house, you might find yourself in a multiple offer situation!

The weather forecasts another snow fall this weekend, but it may be mother nature's last hurrah for winter. Everyday it seems that the snow is melting away, soon we will see the brown grass turn green, leaves forming on the trees, and the ice melting on the lakes.

Before you buy or sell a house, make sure you have done your research, and have consulted with a professional. This Spring will be very busy and it's important that you are prepared to move fast in today's market!

Multiple Offers- Strategies for Success in Homebuying

So you have found the ONE- the home you can see yourself living in, where you will entertain your friends and family, where you will labor over improvement projects and celebrate holidays. Wait! Someone else has found it too. Even though it is a buyer's market in many respects, some areas and price ranges are seeing multiple offers on homes.

If you are going to be searching in a high demand area or price range, you need to take a few key steps before you look at homes to give yourself the highest chance for success. First, get pre-approved for a mortgage. By pre-approved I don't mean that you have just ran some numbers on an on-line calculator or talked to a relative who is in the banking industry. You will want to choose a reputable lender and do a mortgage loan application. To identify homes to consider, you need to know what your price range is and what loan programs you are qualified for; some properties are not eligible for all loan types. By figuring out the financing first, you to be ready to act quickly if you find a home and another party is interested.

Next, make sure you are working with an experienced Realtor that is familiar with your area and price range; you will be relying on their expertise to write a competitive offer. Buyers often do not take this step seriously enough. Buying a home is usually one of the largest financial transactions of your life. Take the time to find a trusted professional to assist you.

If you have viewed a number of homes and find one that really stands out in price, location, quality or features chances are someone else will notice too. You may have pictured yourself negotiating the deal of the century on the home but if another party is interested, you will need to adopt another strategy if you want to make it yours.

Typically if there is more than one interested party in a home in Minnesota, the listing agent will set a deadline for buyers to submit their "highest and best" offers. "Highest" is obviously referring to the highest price you are willing to pay for the home. Think this over carefully. While no one wants to pay more for a house than what it is worth, each buyer may have a different sense of the home's value. Your best bet is to consider comparable sales and decide what you are willing to pay. Homes that sell in multiple offers may be priced lower than the competing homes to ensure a quick sale. They very often sell above the listing price. You may have no idea what the other parties are offering which is frustrating to many buyers. Remember, the other parties are in the same situation. Submit an offer for the most you are willing to pay; another way to look at it is the amount that if another party is willing to pay any more than you, you can accept losing the home and continuing your search.

In writing your "highest and best" offer, "best" refers to the terms of your offer. To compete with another offer you want to have terms that would be desirable to a seller. For example, if the home is vacant, the sellers might prefer a quick closing date. Other areas the seller will compare between offers are seller concessions, contingencies, financing and earnest money. Your Realtor will be able to advise you on presenting the best possible offer.

Remember, you are searching for a place to call home. Don't get discouraged if you end up competing with other buyers for the right place. That just means you have good taste in homes!

Do Buyers Have Less Choices?

I have recently been hearing from buyers that they don't feel like there are enough choices for them in the marketplace. I did a little digging to legitimize what they have been feeling. The Supply and Demand Ratio shows there are 4.39 homes on the market per buyer. This is down from 5.02 homes per buyer in April 2009 and 7.28 in April 2008. While the numbers for this year and last year look similar, that is nearly a 13% difference in the amount of homes for sale per buyer which is a large enough difference to be felt in the home shopping process.

Here is the Weekly Market Report from the Minneapolis Area Association of Realtors with more current statistics. Additional evidence can be found in the number of homes on the market which is down 12.5% from last year at this time. Another measure that the industry uses shows there is a 6 month supply of homes on the market; 2 years ago there was over a 9 month supply of homes.

These statistics match up with what several of my buyers have been feeling. However, if we look a closer at the statistics we find that not all price ranges are created equal. For example, overall inventory may be down and buyers under $120k may be shackled with less choices (currently a 3 month supply of homes) but buyers shopping in the over $1M range have almost a 3 year supply to pick from (compared to a 2 year supply a year ago). There are price ranges and areas where buyers still have significant choices and opportunities. For buyers, it is very important to review price range specific statistics when pondering the age old buying questions, "is now the right time?" I recommend getting an analysis of your specific area of interest and price range to know exactly what's happening within your shopping budget.

Jacqueline A. Miller

Stylish Eagan Townhome- New Listing

Check out our the virtual tour of our new listing at 3762 Vermilion Court South in Eagan. A sunny front patio sets the stage for the terrific interior spaces to follow. The comfortable living room has new wood laminate flooring and features a cozy gas fireplace. The adjacent dining area flows nicely into the kitchen with a handy breakfast bar, ceramic tile flooring and new stainless steel appliances. The upper level is comprised of two generous bedrooms and a loft. This impeccable townhome has quality updates throughout and is available in time for you to qualify for the first-time home-buyer tax credit. Offered at $144,900.

Homebuyer Tax Credit Extension for Members of the Military

If you are a member of the military or certain other federal employees serving outside of the U.S., you have an additional year to qualify for the homebuyer tax credit. Here is the information from the IRS on this extension.

For other consumers, we are fast approaching the deadline to be under contract for your qualifying purchase. Purchase agreements need to be signed by April 30th and you need to close by June 30th. Take advantage of the credit, low interest rates and record affordability.

Become a Home Buying Expert - First Time Home Buying Seminar Saturday 3/6

Buying a home in today's market can be very challenging with a glut of bank owned and pre-foreclosure properties on the market. There are deals to be had out there but with the positive upside comes many new risks. Join Jam Associates on Saturday, March 6th to get all the information needed to make an educated decision on your biggest life purchase. Information will include education on "short sales", facts on current market conditions, and tips for saving money on your loan. All prospective home buyers will leave with a complete home buying packet with extra info on the current $8000 and $6500 Federal Tax Credits, inspection ideas, current properties for sale, and a detailed list of the steps involved in purchasing real estate. Attendees will have plenty of time to get their questions answered in a friendly, casual atmosphere.

The seminar is FREE and requires no obligation. This is your chance to become a home buying expert!

Here are the details:
Saturday, March 6th - 10am
5201 Eden Avenue Suite 100, Edina

Please RSVP to jamrealty@jamrealty.com