Shauna Ray, 2020 President
Northern Wasatch Association of Realtors
Northern Utah’s hot real estate market continues. With inventory cut by two-thirds compared to last year, buyers are facing tough competition.
In Weber County, for example, there were only 298 homes listed at the end of January. That’s down 64% from last year. In Davis and Morgan counties, inventories were cut 65% and 81% respectively.
Competition was fiercest in Box Elder County where the number of for-sale homes fell 76%. This equates to less than half a month of supply and means Box Elder has the strongest seller’s market in the state.
For buyers who are frustrated by the situation, there are some things you can do to increase the likelihood the seller will choose your offer. Below are 10 top strategies that successful buyers are using today to boost their chances of getting the house:
- Submit a pre-approval letter: If you’re serious about buying a home in this market, you’ll want to talk to your lender and get pre-approved for a loan before house-hunting. Submit your pre-approval letter with your offer to show you are more likely to close quickly on your loan.
- Be quick to submit your offer: In some cases, homes are going under contract only hours after the house goes up for sale. Work with your Realtor to get notifications when new listings go on the market. Then be ready visit right away and submit an offer as soon as possible. Work with your Realtor to see if the seller has set a deadline for receiving offers.
- Increase your earnest money: Show the seller you are serious about purchasing the property by submitting a large amount of earnest money. Talk to your Realtor about what is customary in your market and what amount would stand out.
- Make your earnest money non-refundable: Your offer will stand out even more if you submit a deposit you won’t receive back if you cancel for any reason. Typically, buyers will get their money back if they cancel in certain situations. With non-refundable earnest money, you’ll lose the money if you back out for any reason, including if you find something in the inspection or are unable to get financing. It’s a great way to get the seller’s attention, but there is risk involved.
- Agree to pay above the appraised value: In a market with rapidly rising prices, not all houses are appraising for what the buyer has offered to pay. Make your offer stronger by letting the seller know how much you are willing to pay above appraised value. This often involves putting down more cash to make up for the amount the lender won’t lend. Make sure to work with your Realtor to clearly establish what you’re willing to pay.
- Pay cash when possible: Sellers like cash because the buyer can purchase the home quickly. If you have the ability to pay without financing, it’s a great way to strengthen an offer.
- Keep deadlines as short as possible: Your offer will be more enticing if you have a quick inspection deadline, financing deadline and closing date. Make sure to work with your lender to see how fast you can realistically close on your loan.
- Limit contingencies: Although this can be risky, some buyers are willing to forgo the protections that allow contract cancellation based on inspections, appraisal and financing.
- Tell the seller how much you love the house: If you really love the sellers’ house, let them know. Use a letter as an opportunity to let sellers know you are serious about purchasing this particular property.
- Use an escalation clause: You can use an escalation clause to let the seller know how much you’re willing to pay above the amount that any other buyer offers. Be careful with the strategy and make sure to clearly specify the limit of what you are willing to pay.
To learn more about how to navigate the housing market in your area, contact a local Realtor. Find a directory of Northern Wasatch Realtors at NWAOR.com.