Game Plan

Morales Group

Here at last is the promised game plan for success in this low inventory market, for those who don't have a couple million in cash. What you need to understand in general, and in this market in particular, is that the listing agent is likely looking at many offers, and will choose the highest offer which is most likely to close in a timely manner.

Going into contract and falling out, due to lending issues or buyer cold feet, can be very costly to the seller. This adds significantly to the days on market, which can seriously inhibit momentum, and diminish market value, so shaky looking offers do not get accepted when there are alternatives. I am told that FHA loans are closing, but with the low down-payment, they will not be the seller's agents first choice - unless the seller is so charmed by your buyer letter that they override the agents preference for a large down-payment and the commitment that more cash shows on the part of the buyer.

1) Get pre-approved

Fully pre-approved, not casually pre-approved from a phone call, but laboriously, document intensively, pre-approved. Ideally with a well known in this market, solid and experienced lender/mortgage adviser.
The sellers agent will give this more weight, as lending trouble late in the escrow period is a nightmare they want to avoid.

2) Pre-inspect

If you really love it, and many other offers are expected, pre-inspection will allow you to forgo the inspection contingency, which will accelerate closing. Yes, this is potentially throwing away $500-650 if you don't get the property, but we are talking hundreds of thousands of dollars here. Your agent can run market comparables for you, and assess the level of competition. If it's a hot property, and you want it, pre-inspection shows commitment, and will give you a realistic sense of whether you really want to make an offer in the first place.

3) Submit a fully executed (signed) disclosure package with your offer.

This is a fair bit of work for you and your agent. You will have to do it anyway if you get into escrow though, so if you are really interested in the property you may as well do it, as again, it shows commitment, and gives you a realistic sense of whether you really want the property.

TorontoLife

All of this is dependent on the sellers holding to their offer date, and not accepting a preemptive offer. If you are fortunate, you will not be up against a no contingency cash offer, and your excellent agent's well presented offer package (including: your 20% plus down-payment, solid pre-approval letter from a solid lender, stellar credit score and nice buyer letter), may just get you into contract.

Roller Coaster

Whoops, here I am! Surfacing from the emotional roller coaster of writing offers, Giants World Series win, election, Sandy and Athena. Not boring, these times we are living in, that's for sure.

Hurricane Sandy has put my last couple of posts about water intrusion into perspective, and then there is the earthquake in Guatamala, and various other enormous challenges people are facing. Construction professionals will be very busy.  So for today we give thanks that our housing and commercial buildings are intact, dry and functional, and send prayers and money to help those who are not so fortunate.

That said, the shadow side of the Bay Areas economic rebound is that competition for desirable properties is fierce. It remains an excellent time to buy (and a terrific time to sell), with the rental market also "hot hot hot", interest rates still at record lows, and prices moving up. Inventory continues to be especially low, and there is a lot of pent up buyer demand. Find a good realtor ( I can help you with that) and believe them when they tell you the time for low balling is long gone. Next post: game plan for success in this market, because all this interesting earth based real estate advice is nice, but home ownership requires actually getting in to escrow.