A recent real estate market analysis found that nearly one-third of all home purchases nationwide were cash transactions between January 1, 2021, and April 30, 2021. Remember, what is happening nationwide reflects what’s occurring in the housing market on the local level. Adding that housing inventory is low in Farmington Hills, Michigan, it’s becoming increasingly tricky for non-cash buyers to get a foothold in the home purchasing race, never mind winning it, taking the prize of homeownership.
Tips To Beating Out Cash Buyers
So you’ve found yourself going up against cash buyers in purchasing that dream home. Don’t give up! There are several ways to get yourself on an even playing field when dealing with cash home buyers in Farmington Hills.
Increase Earnest Money Deposit
Earnest money is essentially a deposit put up in good faith that reserves your right to purchase the home. If you back out of the contract without reason, the seller retains the earnest money. Increasing your earnest money deposit shows the seller that you’re serious about buying their house.
Get Mortgage Pre-approval
Mortgage lenders typically offer fully underwritten preapprovals. Meaning they’ve run a credit check and verified your finances for your mortgage loan before bidding on a property. Pre-approvals give the seller an added layer of credence that you’ll follow through as a qualified buyer. Generally, the document required by a lender for pre-approval is proof of assets and income, optimal credit, and verification of employment, typically called a VOE.
Better Adherence To Seller’s Timeline
A seller’s goal is likely a smooth transition. However, keep in mind they too are making a move, possibly to a new home. Extenuating circumstances possibly command a quicker process, or they may require some extra time before vacating the property. Be agreeable when it comes to meeting the seller’s needs if you’re in the running with an all-cash home offer.
Appraisal Gap Guarantee
An appraisal gap guarantee guarantees that the home buyer covers the monetary gap between the contract price and the appraisal if it comes in too low. To overcome a low appraisal, a buyer pays the difference or renegotiates with the seller.
Go Above Asking Price
Cash buyers are notorious for going below the asking price, knowing a quick sale is enticing to some home sellers. A buyer has the option to include an escalation clause that automatically increases your offer to a maximum stated amount if a cash buyer outbids you.
Limiting or waiving contingencies isn’t entirely without risk, but it shows the seller you’re willing to work with them to secure the deal. The financing contingency, inspection contingency, sale contingency, and appraisal contingency are items to consider waiving to simplify the home buying process. Keep in mind that waiving these items waives certain rights like an inspection, backing out of a contract, or renegotiating.
You are probably wondering that if a person can buy a house on their own, then why can’t they sell one on their own as a For Sale By Owner (FBSO) . Homes for sale in Farmington Hills, Michigan deserve a great Real Estate agent to market, stage, arrange appointments and screen buyers to assure they are pre-qualified and able to purchase your home and get you the best price possible.
Houses that have the sign stating “FSBO” (for sale by owner) do not make much profit. According to the National Association of Realtors, in 2017, 89% of the sellers sold their house through a real estate agent and 87% of the buyers hired a real estate agent for the purchase. A house sale that was handled by a real estate agent went for $249,000, whereas one that was handled by the owner went for $190,000.
A few difficulties that FSBO houses face include:
- Inability to set the right price
- Unable to understand the paperwork
- Not being able to sell the house within the planned time
- Failing to stage the house properly for the sale
- Not having enough time for giving people a house tour
Now that you know what awaits you if you put up your home for sale in Farmington Hills, Michigan, on your own, let’s have a look at the following reasons why hiring a real estate agent is more beneficial:
1. They Have More Knowledge about the Real Estate Market
You won’t be able to make a sound deal on your home for sale in Farmington Hills, Michigan, because both the parties, you and the buyer, are not familiar with most of the real estate terms. A loophole might become visible in the future that will negatively affect you both. This is where a real estate agent proves his worth. Not only is he up to date with the current real estate market trends, but he also knows what documents are needed to make the transfer as easy as possible.
2. House Is Priced Competitively
The real estate agent knows more about comps than you will ever find out on the internet. Comps are necessary for setting the price. They are the key to multiple offers. Why would you pass up on such a good opportunity!
3. They Have Several Online Marketing Strategies up Their Sleeve
A real estate agent has several connections, which allows them to market your house to the right buyers. They are recognized in the industry, which gives them the power to sell your house within a month.
4. High Profits In Homes For Sale Farmington Hills, Michigan
When a trusted and reliable real estate agent handles home for sale in Farmington Hills, Michigan, you can be assured that you will receive a hefty profit. Clients with whom he has been working for a long time will trust his judgment and might even agree to the asking price without negotiations.
Convinced why hiring a real estate agent, who will ask for a small commission (did we mention small), is such a good idea? If you think about it, a real estate agent has magical powers—sort of— that help you sell your house easily. If you are looking for such a competent real estate agent who will help you with your house’s sale, then visit Homes2MoveYou or call me 248-790-5594 and get your house listed and beat the upcoming competition.
There is no doubt that it is tough for Farmington Hills home buyers with the shortage of inventory to find the perfect home. The Farmington Hills inventory shortage has created a very competitive compared to most recent times. As a potential home buyer you might be asking yourself if you should wait in out another year, but in reality you may want to rethink that idea. Their are homes for sale out there for you but you need to be ready aggressive and have a great real estate agent to help you through the process.
Farmington Hills Home Buyers Wont Save Money Waiting
Referencing the US Home Price Insights from Corelogic, Farmington Hills home buyers may have a surprise as home prices are expected to rise 5.7% year over year-meaning a Farmington Hills home buyer considering on buying a new home today will pay 5.7% more for the same home in 2019. This time next year a home of interest for example that’s listed at 275,000 with the increase of 5.7% will be 290,675 costing 15,675 more than this year.
Frustration VS Saving Money
Being out there in the field with Farmington Hills home buyers I see the frustration and the difficulty in finding a home in this depleted housing market, but just think, not only will you pay more for a home next year it’s a double whammy as mortgage rates are also slated to rise. According to Freddie Mac and their predictions, mortgage rates are going to rise a whole percentage point year over year as well, making home ownership even more expensive.
If you’re waiting to buy until next year my advice is don’t! The best step is to find a great real estate agent who is not afraid to step out of the box and diligently work hard in finding you a home this year.