Today’s North Dallas real estate market is red hot. Yes, we’re seeing loads of construction. But we’re seeing even more commercial construction that creates demand for homes in and around the Frisco/Plano/Allen area. The “Billion Dollar Mile” alone is going to bring thousands of jobs and thousands of families to the area, and they are already starting to look for places in our wonderful community to live.
How tight is the market out here? Consider this: Most real estate analysts consider a six-month inventory of homes for sale to be a roughly balanced market. In Frisco, Texas, we have just about a month of inventory. In Plano it’s even less.
What does that mean? Homes are selling fast. Buyers have to be very quick, and sometimes are even going above asking price, or otherwise having to go above and beyond the call of duty to get their offers accepted.
It’s a matter of time management. Your time has value, and you can’t go on house shopping every weekend forever. When you make an offer, you want it to get accepted and close!
So here’s my advice on how to minimize wasted time and maximize your chances of getting your offer accepted:
- Prepare, prepare, prepare. Have your credit ducks in a row. Take care of all the income verification and everything else ahead of time. Prequalified doesn’t cut it any more. To have the best chance of success in this white-hot market, you want to show up with your mortgage pre-approved. Most sellers in these suburbs will have several cash offers and pre-approved offers on the table, so they won’t be too keen on inking a deal “contingent on financing.” Show up pre-approved, and be prepared to close quickly.
- What is really important to the seller? Is it a fast close? Is it income from the property? Is it a particular closing date? Do they need to stay in the home for a while after it closes? By listening, and being flexible and meeting the sellers’ needs, you can get offers accepted even if you aren’t offering the best price.
- Lead with your best offer. In many other markets you can hold something back knowing that sellers don’t have many options. That’s not true here. Low-ball offers aren’t even getting sniffed at these days. Not with the school districts we have here and not with so many employers moving in and so much development going on.
- Throw in a personal letter. Most sellers don’t have ice water in their veins. They had many happy years in these homes, and raised their families in these homes, and they want to sell the home to someone they A.) enjoy dealing with, and B.) will enjoy their home as much as they did. Sometimes a great letter from the purchaser will be a tie breaker, or even win you the home even if you didn’t have the highest dollar amount on your offer.
- Make your offer with ‘earnest money.’ How much? It depends. 1 to 3 percent is quite common, and the overall trend has been moving up toward the top of that range. But if you’re serious about buying the home, I recommend as much as you can easily afford. It comes off your purchase price, anyway. And if you can easily afford it, there’s no reason not to!
Also, under Texas law, using standard real estate contracts, you should have to wait not longer than15 days if the seller doesn’t go through with it.
If you can’t swing the earnest money that someone else might have, but you’re pre-approved for the mortgage and you come across as a sincere and honest buyer (not someone just looking to tie up a home for a while you kick the tires), then that’s where your personal letter can have a lot of value!
Are you intimidated by all cash buyers? Don’t be. Many of them aren’t offering enough money. They’re largely investors, rather than people looking to raise their families in the home, and their business model requires them to bid low. You can beat them if you stay within the markets you qualify for.
- Consider offering more than the asking price. If the original price was reasonable enough to get your attention, chances are good someone will bid it up, anyway. You may as well get in the catbird seat. You may get an immediate ‘yes.’
Love the home but didn’t get the deal? Consider making a backup offer. If things go south with the first buyer, a backup offer, if accepted by the seller, gives you ‘dibs’ on the home.
You still need to come up with earnest money in place (you give it to the escrow company. You’ll get it back. You may need to come up with option money, as well, since your essentially buying a ‘call’ option on the home, or giving the seller a ‘put’ option on the home, depending on how the contract is written.