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How to Make a Winning Offer on a Home
Today’s homebuyers are faced with a strong sellers’ market, which means there are a lot of active buyers competing for a relatively low number of available homes. As a result, it’s essential to understand how to make a confident and competitive offer on your dream home. Here are five tips for success in this critical stage of the homebuying process.
1. Listen to Your Real Estate Advisor
An article from Freddie Mac gives direction on making an offer on a home. From the start, it emphasizes how trusted professionals can help you stay focused on the most important things, especially at times when this process can get emotional for buyers:
“Remember to let your homebuying team guide you on your journey, not your emotions. Their support and expertise will keep you from compromising on your must-haves and future financial stability.”
A real estate professional should be the expert guide you lean on for advice when you’re ready to make an offer.
2. Understand Your Finances
Having a complete understanding of your budget and how much house you can afford is essential. The best way to know this is to get pre-approved for a loan early in the homebuying process. Only 44% of today’s prospective homebuyers are planning to apply for pre-approval, so be sure to take this step so you stand out from the crowd. Doing so make it clear to sellers you’re a serious and qualified buyer, and it can give you a competitive edge in a bidding war.
3. Be Prepared to Move Quickly
According to the latest Realtors Confidence Index from the National Association of Realtors (NAR), the average property sold today receives 3.7 offers and is on the market for just 21 days. These are both results of today’s competitive market, showing how important it is to stay agile and alert in your search. As soon as you find the right home for your needs, be prepared to submit an offer as quickly as possible.
4. Make a Fair Offer
It’s only natural to want the best deal you can get on a home. However, Freddie Mac also warns that submitting an offer that’s too low can lead sellers to doubt how serious you are as a buyer. Don’t make an offer that will be tossed out as soon as it’s received. The expertise your agent brings to this part of the process will help you stay competitive:
“Your agent will work with you to make an informed offer based on the market value of the home, the condition of the home and recent home sale prices in the area.”
5. Stay Flexible in Negotiations
After submitting an offer, the seller may accept it, reject it, or counter it with their own changes. In a competitive market, it’s important to stay nimble throughout the negotiation process. You can strengthen your position with an offer that includes flexible move-in dates, a higher price, or minimal contingencies (conditions you set that the seller must meet for the purchase to be finalized). Freddie Mac explains that there are, however, certain contingencies you don’t want to forego:
“Resist the temptation to waive the inspection contingency, especially in a hot market or if the home is being sold ‘as-is’, which means the seller won’t pay for repairs. Without an inspection contingency, you could be stuck with a contract on a house you can’t afford to fix.”
Bottom Line
Today’s competitive market makes it more important than ever to make a strong offer on a home. Let’s connect to make sure you rise to the top along the way. The members of the Dot Ollier Team at RE/MAX Riverside—Mike Hamilton, Peter Bettinger, and Dot Ollier—are here for you!
Spotlight on Women's Struggle for Property Rights
By: Jeannie Parker, Associate Broker
As we think about the momentous swearing in of the country’s first woman vice president and celebrate over 100 years of women having the right to vote, it’s important to take a moment to reflect just how far we’ve progressed in America’s long-fought struggle for equality—albeit piecemeal and at a snail’s pace! Just as it’s hard to imagine that half of the country’s population was denied access to participate in the democratic process until 1920, it’s equally as mind-blowing to ponder just how long women struggled to obtain the individual property rights that we take for granted today.
Though it’s curious to note that women had many more legal rights in ancient times, the same can’t be said of the early years of the American experiment. “All men are created equal” did not include women or people of color, none of whom had the ability to obtain a line of credit, apply for a loan, or own/inherit property. The colonies adopted the centuries-old practice of “coverture,” a doctrine whereby, upon marriage, a woman’s legal rights and obligations were subsumed by those of her husband. “Feme sole” (an unmarried woman)—though limited—had more leeway than the “feme covert” or married woman, who was considered the property of her husband.
Notable progress:
• 1771: New York became the first state to pass legislation that gave white married women some say in what their husbands did with their joint assets.
• 1787: Massachusetts voted to allow married women to conduct business on their own if their husbands were away or out to sea.
• 1839: Mississippi became the first state to allow married women to own property on their own (Maine and Maryland followed suit shortly after).
• New York’s benchmark “Women’s Property Act of 1848” became a model for other states by further expanding property rights of married women.
In my lifetime:
• Not until the 1960s could a married woman open her own bank account.
• 1974: The Equal Credit Opportunity Act eliminated the need for a single, widowed, or divorced woman to bring a male along to cosign any credit application—which had been required regardless of a woman’s income and in spite of the 1963 federal law that prohibited gender-based discrimination in wages. Banks could discount the value of a woman’s wages when considering how much credit to grant by as much as 50 percent!
• 1978: The Pregnancy Discrimination Act made it illegal to dismiss women from their jobs for becoming pregnant.
• Prior to 1981, a husband had the right to unilaterally take out a second mortgage on property held jointly with his wife.
While women have made huge strides in homeownership (it’s reported that single women made up nearly 20 percent of all home purchases in 2020), there remains a substantial gap in equal pay for equal work—in fact, it’s estimated women make 25 percent less than men. With more and more women in policy-making positions, however, we should see even greater progress when it comes to leveling the playing field—changes that are long overdue!
What Factors Determine the Strength of the Real Estate Market?
Just as all markets go up and come down, real estate tends to run about a decade from downturn to peak. Regulatory, economic, demographic, and lifestyle factors all influence the market—whether they’re local, national, or global factors.
Economic conditions might include mortgage rates, performance in investments, employment levels, and available housing inventory. A seller’s market (our current situation in Maine) means there is a shortage of available homes for sale, allowing most sellers the ability to ask for and receive the highest purchase price with the best financing terms. A buyer’s market means there is more supply than demand and prices become depressed with longer sales times, allowing buyers to offer a lower purchase price and more creative financing.
Maine seems to be a destination on everyone’s radar these days, offering a slower, calmer lifestyle, clean air, and more frequent opportunities to enjoy the outdoors. Coupled with very low interest rates, the result has been an influx of buyers throughout much of the state that has not been experienced since 2004-2005. Some sellers are experiencing the benefits of the elevated market situation, while others are falling prey to unreasonable expectations. Many buyers are experiencing panic as they try to secure their new home in the face of stiff competition and multiple offers over asking price.
Conventional wisdom in the real estate industry holds true. Location, condition of the property, and a price that fits the actual market are critical for the successful seller. Buyers need patience, good credit, a solid employment history, an established relationship with (preferably) a local lender, and flexibility to achieve the goal of home ownership.
Each extreme in the market and every condition in between requires an accurate understanding of the forces at work so that sellers and buyers will be as successful as the current market allows. Strategies will differ, and the most experienced and savvy agents will know which strategies to employ given the needs and desires of each individual client. The process is highly individualized, nuanced, and time-sensitive. A strong working relationship between agent and client can help ease the stress and anxiety that can accompany a real estate transaction.
We urge you to trust the talented, tireless agents of the Dot Ollier Team at RE/MAX Riverside—Mike Hamilton, Peter Bettinger, and Dot Ollier. We are personable and professional. We know Maine and we have YOUR back!
Redlining: A History
I’m sure I’m not alone in feeling naïve and a bit mortified by how little I know of the Black experience in the United States. The school curriculum in my all-white New England town taught only the basics of how the slave trade operated and how it related to the Civil War and Reconstruction. And while I was well aware in real time of the chaotic Civil Rights Movement of the 60s, the recent protests across the country have made us all so much more aware of the rich, ugly, and heart-wrenching tales of past, present, and persistent racism.
Take, for example, the practice of REDLINING. My real estate licensing textbook defines the term as: “The practice of lenders outlining neighborhoods where the lender will not lend to homeowners and will take back mortgages; the practice is illegal.” At the time, this term was new to me, so I investigated further. A brief synopsis of redlining:
In response to a housing shortage, the federal government, as part of the 1933 New Deal, began a program explicitly designed to increase—and segregate—America’s housing stock. The program was designed to develop and provide housing to white middle and lower-middle-class families. People of color were purposefully left out of these new suburban subdivisions and were instead pushed into urban housing projects.
The Federal Housing Administration (FHA) furthered governmental segregation efforts by refusing to insure mortgages in or near Black neighborhoods and instituting racially restricted deeds and covenants. The justification, at the time, was that if African-Americans bought these homes, the property values would decline and the loans they were insuring would be at risk. This rationale was never based on any study or reality.
Metropolitan maps were color-coded by various governmental agencies and real estate agents to indicate where it was “safe” to insure mortgages. Coloring African-American neighborhoods in RED alerted appraisers that loans there were too risky. In fact, the “Underwriting Manual” of the FHA stated that “incompatible racial groups should not be permitted to live in the same communities.” In some instances, concrete barriers or highways were built to physically separate white developments from abutting African-American and Latino housing.
Most middle-class families in the US gain their wealth from the equity they have in their property. The enormous difference between a 60% and a 5% wealth ratio between white and Black America is almost entirely attributable to the accumulation of federal housing policies implemented throughout the 20th century. That continuous accumulation of equity allowed white people to send their children to college, to maintain and improve their property, and to take care of their older parents—a chance for upward mobility.
Though state-sponsored segregation is a policy long past, real estate agents MUST remain on high alert for any infraction of Federal Fair Housing laws. Always look for the Fair Housing symbol.
For more information, see Richard Rothstein’s The Color of Law: A Forgotten History of How Our Government Segregated America.
October 22nd, 2019
Wondering what improvements might get you the biggest bang for your buck? Here's the latest from National Association of Realtors!