Recently, we had a client who submitted an offer on a nice little house. It was turnkey, updated nicely, and decorated as if it jumped out the television straight from HGTV.
We wound up competing against 31 offers.
That sounds insane, right? If you’re looking for a home right now, it may also sound familiar. Finding a home is tough in the current market. Inventory is very low, and demand is sky-high. If you remember basic economics, you’ll know that this doesn’t lead to a balanced market, which can – and does – make for a stressful buying experience. Competing with multiple offers for every home can be both tiring and defeating.
So what can you – as a buyer – do to give yourself a better chance?
There are a number of things you can do when making an offer on a house. We always recommend finding a reputable local lender, being flexible on terms (closing dates, waiving small inspection items, etc.) if possible, and moving quickly and aggressively. The truth is, most competent agents are utilizing these same strategies though. And with all-cash buyers becoming more and more frequent it can feel almost impossible to win in these bidding wars.
What’s a buyer with a budget to do?
Before you jump into the ring and are ready to duke it out with a dozen other buyers over the next ‘perfect’ house….consider a renovation.
Don’t be intimidated.
Now, we’re not saying that everyone should pull a Chip and Joanna and buy a place that needs to be taken down to the studs. What you can do is consider a house that might not fit every item on your checklist. Maybe it’s the right house, but the kitchen is dated. Or the bathroom needs some updates. Maybe the roof or HVAC has lived its life and you won’t have the cash post-closing to pay for a large project like that. Don’t let these kinds of “issues” scare you. Focus on finding a property that meets your needs on things that can’t be changed – location, layout, and overall size, and try to turn a blind eye to that pink tile in the master bathroom.
Houses that need a little work can be a perfect opportunity. They are typically going to be priced lower, and are not going to have as many people clamoring for them. By shopping a little below your target price and utilizing a renovation loan, you can take a house from “it has potential” to “move-in ready” in a matter of weeks, not years.
Here is the key though: the renovation loans we are talking about aren’t a second, high interest, shorter term loan like a HELOC. This is a single conventional loan that includes the amount you need to buy your home plus access to the funds for the immediate projects that need to be taken care of right after closing.
An estimate of the cost of renovation is made and approved during the contract period by a licensed contractor, and then the bank holds that money and pays the contractor directly after the work is complete. If you come in under budget, that just gets taken off of your loan.
We partner with solid local lenders who are well versed in renovation loans and will guide you to the best loan type for your situation. We can also connect you with trusted contractors that can get the job done professionally, on time, and without busting your budget.
If you’re tired of fighting for every home you look at, consider renovating. You’ll find lower prices, less competition, and you’ll get to make your own choices about your house. Yes, it’s a bit of extra work, but it beats overpaying for a house, and the bonus is you get to make the choice of styles and upgrades in your new home. We’ll work with you to find the best fit for your needs and support you as you make it your dream home.