The recent fire disasters have created housing demand not seen in Sonoma County in many years. Prior to the fires, strong competition, coupled with limited supply best described the local market. Now that the fires have wiped out 5 percent of the Sonoma County housing market, the problem has intensified. Here is how to win…
Be Realistic- Gone are the days of finding a screaming deal on a home. Be prepared to pay fair market value. Part of being realistic also means listening to your real estate agent. They have a finger on the pulse of the market. Your agent knows what is selling, what is not selling and what types of offers generally earn you a shot at the prize.
Be tenacious- if you don’t have the stomach for making multiple offers stay out of the game. This market requires a strong degree of tenacity if you want your home buying efforts to result in success.
Despite the housing shortage that exists in the County of Sonoma, people purchase and still sell houses around life events. This was, is and always will be the catalyst for home sales. Such events include job change, income movement, death, illness, sickness, divorce, marriage and children. There are others, but these are the main events that cause people to move real estate. These events will always stand the test of time no matter what is happening in the market.
Knowing that every real estate market is cyclical, the next thing you must have is your finances lined up. This means if you were paying cash for a house, have your cash available and be ready to provide proof of funds to close. If you’re securing mortgage financing this means letting your lender do a complete and thorough analysis of your financial picture so you are bulletproof when you make your offer.
Mechanics of the offer to increase your odds…
Shorter loan and appraisal contingency
Why: A shorter close of escrow is stronger on paper because it conveys to the seller that you can perform quickly which is appealing from a monetary timing standpoint. Shorter loan and appraisal contingency means a full commitment faster which also is faster to the green for the seller.
Hand deliver offer
Why: your realtor hand delivering the offer to the listing agent makes a statement. It says, “I am so proud of this offer that I’m willing to devote my time and energy in delivering it to you because I value you.”
Letter to the seller about your family
Why: A letter to the seller can pull on their heartstrings appealing to one of the life event situations. Oddly enough while every seller is concerned about purchase price you may be surprised to see how many people really want to make sure the house they are selling goes to a family they established a connection with.
Why: a video from the lender to the listing agent they can share with the seller can go a long way in making your offer stand out from the competition.
Proactive lender calling listing agent
Why: It is the listing agent’s job to help their seller vet each offer. When the lender proactively makes a phone call to the listing agent, it makes the job for the listing agent easier because the lender is already doing the work for them. If your lender is local they can help establish a connection further leading to picking your purchase offer.
Avoid an FHA loan if you can
Why: FHA loans are a tougher mortgage loan to close. There is more paperwork and the property requirements are slightly more stringent than conventional financing. This does not mean that an FHA offer will not stand in this market. It does mean that if you have the financial means to go with a conventional loan do it.
To buy a house in this current market it is imperative that you have the eye of the tiger approach to buying a home. You must do whatever it takes to stand out from the competition.
Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes second homes and investment properties. Learn more at www.sonomacountymortgages.com.