According to the California Association of Realtors, the median price for homes in the Inland Empire rose this month about .07% to an astounding $338,010. Yes my friends, we are in a seller’s market!
However, I don’t want to dissuade buyers from jumping in. This is a great market for buyers to get in on the fun and negotiate like a pro! Although sellers may seem to have the upper hand, it is buyers that will have the best selection of homes to choose from in this market… The secret is to negotiate wisely!
In this market, when you find the home that “speaks to you”, one way to negotiate smartly is to make the seller an offer he cannot refuse. You can do this by removing as many contingencies as possible with the offer.
So, what are contingencies?
When you write an offer on the California Association of Realtors Purchase Contract, which is the purchase contract that will be used when using any California realtor, the contract defaults to three major contingencies:
The contract states that you have a full 17 days to inspect the property, which is called the inspection contingency. You can inspect the neighborhood, the jurisdictional codes, the disclosures sent over by the seller, the title, and any number of other things you want to check before committing. The second contingency is the appraisal contingency. You also have a full 17 days concurrently with the inspection period to have the property appraised so you can be sure that the price you pay is the value you receive. Finally, you have a loan contingency. The loan contingency is the time allowed for you to get full loan approval. In other words, you write an offer that is contingent on, 1) that there are no major defects with the home, 2) that it appraises at the value of the sales price, and 3) that you can get full loan approval. As a buyer, you have plenty of time to decide whether this is the home for you. And, if in the end you decide this really isn’t the “one”, you can bug out!
So how do I make my offer better?
If you write an offer that has no contingencies, this can be very attractive to the seller. But, you don’t want to do this at your detriment. Here is the hot tip… there is one contingency that you can remove that will not hurt you, but that can work in your favor. You can remove the loan contingency. If you work with a lender who can get you fully approved, you can approach the seller with an offer that is NOT contingent upon loan approval! Not only will this make your offer more attractive, it can also decrease your number of days in escrow. You can write an offer with a mere 21-day escrow. Sellers love this and it will put you way ahead of the game. Your goal is to be the most attractive offer, yet with assurance that you still have time to do your due diligence to make sure that you have selected the home you anticipated.
So, as a buyer, you really do have the upper hand. Don’t be afraid of making the “winning offer”… go for it! I always tell my clients to make the offer, then decide whether this is the one. It’s better to have your foot in the door. If you wait, often times that home will be gone before you know it… then there will be much regret.
Once your offer has been accepted, hire the inspector, talk to the neighbors, review the preliminary title report, have your realtor pull the comps… all of these things can help you decide whether this is truly the home of your dreams! And if it’s not, you can back out with no ramifications.
Property values go up over time; this is a fact. I hold a copy of a 1974 MLS publication for the city of Rialto. I can guarantee that a holder of property from that year has increased in value at least six-fold. Real estate is the one investment that, over time, is guaranteed to appreciate.
I want to encourage you. I know, it’s scary, but if you have the knowledge and the tools you need, you can make a deal that will benefit you in the long run.
Let’s get going!