• Jason Kern • Buying A Home

Helping clients buy their home in today’s market has some particular challenges. We’re hearing about “low inventory” and “seller’s market” and “multiple offers” in news articles and memes every day. As Kern Real Estate solves challenges and evolves to meet our clients’ needs we recognize that change is constant. Below are a few of the most common tools and tactics we’re using to help navigate the process of buying a home. These should be part of the conversation regardless of the agent or agency you’re using. This is true whether you’re a first time home buyer or a seasoned house flipper.

First, the Fundamentals – The underused phone call to the listing agent. Time and time again, a simple phone call from buyer agent to seller agent edges a buyer forward in a competitive offer situation. I’ll always ask the question “What’s important to your seller?”. If I can find out that there are timing concerns, or some sentimental attachment to the property, or something specific that can be added to the offer it always increases the consideration paid to that offer. I never underestimate the power of a quick phone call.

Escalation Addendum to Send ’em – This fairly recent addition to the agent’s tool kit. It allows buyer clients to mitigate the risk of a much higher than listing price offer. This addendum allows buyers to offer a specific price but with the additional term that a buyer can beat any other offer by a smaller amount up to a maximum offer. In plain terms, the buyer is saying “I’ll pay $X,000 more than any other offer up to a maximum amount”. The escalation addendum is not without risks but it can be a powerful tool if used well.

Flavor of the Waiver – The standard process for purchasing a property includes several safety precautions to keep the buyer safe. However, in this market more buyers are simply forgoing many or all of these stops with waivers. It’s common today to have a buyer waive their option for a general inspection, appraisal and ICA. Each of these decisions comes with a risk but understanding them as you go through the process can help you know whether they’re worth taking. Also, some buyers are waiving conditions that make no difference to the seller! Back to rule number 1. Make sure your buyer agent calls the seller agent to ask what’s important.

Pre-Scheduled Inspection and Seller Connection – If timing is a concern for the seller it may be a good idea to schedule any inspections prior to sending the offer for consideration. This little add-on lets the seller know you’re serious. Just remember, if you don’t get the contract cancel your inspection!

EMD Like a Money Tree – The Non-Refundable Earnest Money Deposit. This one sounds riskier than it is. Some buyers are offering a non-refundable earnest money deposit. It’s essentially a check that is made out to the seller and can be cashed as soon as the contract is accepted. If you’re using this tactic to get the seller’s attention there are some specific notes to put into the Purchase and Sale. It’s a good way to rise to the top of the stack in a multiple offer situation even if your offer isn’t the highest.

Assignable Contract – Most agents in Maine are using the standard Purchase and Sale that was written for the Maine Association of Realtors. If another buyer wins the contract they can assign it to someone else. If the home is a must have for a client, their agent can call the agent of the winning offer and discuss purchasing it. It can be costly, but some buyers are finding it a worthwhile conversation.

Borrow, Buy and Refi – If a buyer has some deeper resources or family/friends who are capable, one strategy is to borrow enough money to purchase the home with a cash offer to shorten the escrow period and eliminate the financing contingency with the bank. Not having an appraisal or a long underwriting process as part of the offer can make a buyer/offer much more attractive. This was a rare occurrence even a few years ago but it’s a strategy that is on the rise in this low-inventory/high-demand market. It’s essentially eliminating the bank and any contingencies that may get in the way regarding their process and an appraisal. After the closing, the buyer can refinance into a traditional mortgage product.

First Position Backup Condition – If you’ve made an offer on a house and you didn’t win the contract. Make sure to work with your agent to quickly submit a first position backup offer. Lots of buyers overcommit and have some remorse after they win the contract. It’s a great strategy to be in the automatic next position to resume the purchase.

So if you’re thinking you’d like to make a change and take some of the equity in your home we’ve got some good ways to get you through the transition. Make no mistake, it can be a challenging process and some of these efforts come with risk but we’re here to help.

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