Multiple offer conditions changing rules of buying a home

Multiple offer conditions changing rules of buying a home
In many neighborhoods throughout the greater metropolitan area, multiple offers on homes for sale are more the rule than the exception, and that's changing the rules for people trying to buy a house.

The multiple-offer mania means many buyers must be prepared to look longer, move faster, and spend more money than they planned.

"You can expect multiple offers," said local broker Shari Kruse.

The Prudential Real Estate Sales Manager says in sought after neighborhoods, homes listed in the $300,000 to $500,000 range are in high demand, especially homes that are in move-in condition. The competition is fueled by the lack of available homes for sale.

The multiple offer condition means buyers must be uber-prepared and expect offers to exceed the asking price. Kruse and other industry experts say it's not enough to pre-qualify for a loan, buyers should be pre-approved before they even start looking.

"There's no point in even going out and looking at homes until you know what you can purchase because it's so easy to fall in love with something you can't afford," Kruse explained.

Experts say ideally, that pre-approved loan should be with known lender that has a local office. Kruse says she discourages online lenders.

"It's really important to have a known, reliable lender. Somebody that you can talk to, who can help you work out the problems," said Kruse.

Another multiple-offer must: substantial earnest money. Kruse advises potential buyers to come to the table with a much earnest money as possible. She recommends at least 2 percent of the asking price, but says in some neighborhoods, 5 percent earnest money is not uncommon.

Buyers should also have the largest down payment possible. With multiple offers, your cash can be what gets your offer accepted.

The low-inventory, high-demand market is also changing the game when it comes to home inspections.

"Expect to do your inspection very quickly," said Kruse. "And many buyers are actually doing a pre-inspection."

That's right: pre-inspections. In some locations, the competition is so intense, some buyers are paying for full inspections even before they make an offer in order to keep the inspection contingency from locking them out of the game.

A pre-inspection means you're out several hundred dollars if your offer is rejected. But waiving the inspection can stick you with thousands in surprise repair bills. Experts say at the very least, have a very experienced building contractor take a look.

It's also critical to make sure your real estate agent knows the business, knows the neighborhoods, and educates you about multiple offer strategies. Among the most valuable strategies- be patient and don't give up. Don't get so emotionally tied to one particular house that you take risks that could cost you in the long run.