12 Strategies for Winning Real Estate Multiple Offers

winning offersIn the Park City real estate market and many areas of the country, low inventory, high demand and low interest rates have created a seller’s market. Multiple offers should be anticipated. It can be extremely emotional to lose a dream home to someone else over a couple of thousand dollars.

To help you in your quest, here are some strategies to win multiple offers. As a buyer, it’s best to use as many of these strategies as possible to stack the deck in your favor.

How to Win in Multiple Offer Situations

how to win real estate multiple offers

  1. Be ready. You MUST be preapproved for financing or demonstrate sufficient cash funds. This is the most important step. You really can’t compete if you have a home you must sell before you can buy.
  2. Be fast. Preview a home the minute it hits the market and don’t delay in writing an offer. If you are not present in Park City when the home hits the market, don’t be afraid to write an offer before physically seeing the property.
  3. Write a full price offer.
  4. Use “escalator” clauses.   (If you don’t know what this is, contact me for an explanation.)
  5. Reduce or eliminate contingencies.
  6. Write a personal letter.
  7. Understand that the home may not appraise and be prepared emotionally, mentally, and financially to deal with that.
  8. Have a “Plan B”, a second choice home if the first choice doesn’t work out.
  9. Understand that an appraisal is a reflection of where the market has been over the past 3 months and the market value or purchase price is the value today. These two numbers may not be exactly the same.
  10. Find out what terms are most important to the seller. You would be surprised that oftentimes price is not the most important term.
  11. Don’t be afraid to write a back up offer. In today’s market, many buyers get cold feet and back out of transactions.
  12. Understand the risks and rewards for coming up with creative terms that allow you to purchase the home.

multiple offersAnd last, it is critical to work with a buyer’s agent who you trust. Your buyer’s agent should understand exactly what you are looking for and your financial situation. This will allow you and your buyer’s agent to work together as a team to push the envelope as much as possible to get you into the home you want to own for the best possible price and terms. If you get into a real estate multiple offers situation, don’t panic. Follow these steps, and may the odds be ever in your favor.

This blog post was inspired by a recent webinar by Larry Kendall with “Ninja Selling”.

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It’s Shoulder Season, Park City!

Shoulder Season Park City, UT65° and sunny. 40° and rainy. Six inches of snow. What do they have in common? They are all weather possibilities during spring in Park City, Utah.

It’s that time of year again. In what is generally referred to as the “shoulder season”, the town is letting out a collective sigh after another successful ski season under its belt. On the tails of being named Outside Magazine’s Best Active Town last fall and some fantastic powder days this past ski season, the first quarter of 2014 real estate sales showed an increase in sales volume of 16.6% over the first quarter of 2013. We holidayed. We Sundanced. We skied and enjoyed the day and night with friends and family. But now it’s time to change gears.

The schizophrenic weather patterns don’t even bother us. You know why? Because if it’s sunny, we’ll hit the trails. If it snows, we’ll hit the trails. And if it rains, we’ll take the rare excuse to relax and do nothing. We do need a reason, after all. We Parkites tend to feel guilty if we are couch bound for longer than an hour.

The great news for businesses which rest their livelihood on the tourists that visit our town, and for tourists who want to visit during this time, is that the shoulder season isn’t nearly as quiet as it used to be. 15 years ago, Main St. was a ghost town after mid-April and well into the summer. Now, a few businesses may take a couple of weeks off, but then the summer pulse, albeit quieter than winter, starts to tick.

Another thing about the shoulder season is that it’s a great time to buy or sell your Park City real estate. School is about to let out, so you can make your big move while life is just a little less busy. We are constantly adding new listings, so bookmark our site and find the next property of your dreams this spring. (In between biking and skiing, of course.)

Are Real Estate Agents a Commodity?

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With Zillow, Trulia, Realtor.com and other home search sites easily available, what value does a real estate professional bring?  

 

Clients don’t need me to find properties for them.  The truth is, most of my buyer clients send me lists of the homes they want to see.  However, a list of properties for sale is essentially useless without a deeper understanding.  My clients know that the neighborhood knowledge, understanding, insider information, analysis, and negotiation skills that I bring to the table are how I provide value.

 

 

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A great real estate agent will help clients understand the differences between properties, values and neighborhoods.  We can help our clients win in multiple offer situations.  We can write contracts that protect our clients from buying a home full of structural problems or getting sued.  We can make sure our clients’ earnest money is not at risk during the inevitable bumps in the lending process.  

 

True real estate professionals provide tremendous value.  Searching a list of homes for sale requires minimal skills.  Navigating the complexities of a home purchase in the best interest of our clients is where we really shine.

The Status of Foreclosures in Park City

 

Summit County Distressed Sales ComparisonAbout a year and a half ago, I wrote a post title “Bye, Bye Foreclosures”

What is the picture like today?

The opportunity to buy short sales and foreclosures continues to decline. Distressed properties accounted for less than 2% of all listings and less than 3.5% of sales in the Greater Park City area during the last quarter of 2013. The average discounted price was only 2% off retail.

Nationally, distressed sales accounted for 25% of all sales last December, with an average discount price of 18% off retail.

This is great news for the Park City real estate market. Buyers should feel confident that although they missed the bottom of the market, the absence of distressed property means our market has recovered. It’s good news for sellers, too. They no longer have to price against distressed properties or worry about bank owned sales that will skew appraised values.

Summit County Distressed Sales Q4 2013

Zillow, Trulia & Realtor.com-What’s the Difference?

Graph Source: NAR
Graph Source: NAR

These are generally regarded as the top 3 real estate search sites in terms of the number of property views.   All of my listings are syndicated to each of these sites and many others.  But does quantity of views measure up to quality of views?  I looked at data collected by my brokerage, Summit Sotheby’s International Realty, to take a closer look.

We measured the number of property views and the number of email inquiries.  While Zillow had the most property views (more than double Trulia and Realtor.com combined), it had the least number of email inquires.  The Sotheby’s International Realty Website, came in at number 4 in terms of number of views, just slightly behind Trulia and Realtor.com; but it had more than twice the number of inquiries as each of those sites and more than 4 times the number of inquiries as Zillow.   Our local brokerage website, came in 5th for property views, but third for number of inquires, with almost twice as many inquiries as Zillow.

What conclusions can we make from this data?  Quantity does not always equal quality.  While it’s nice that hundreds of thousands of people are looking at my listings, the people I care about are the ones who will actually turn into buyers. These are the people who are making email inquiries.  The Sotheby’s International Realty website and our local brokerage site are attracting more serious buyers.

Where do Park City buyers come from?  It turns out that the number one state for searches was Utah, followed by California, Texas, New York, and Florida.  This is no surprise to me, as these states make up the majority of where my clients live.  There is no question that it is important for properties to be syndicated to real estate websites, as 92% of buyers use the internet to search for homes.  It is even more important for properties to be syndicated to the right real estate websites.

What do you think?  Which websites do you use to search for property?

Buy That Fixer-Upper-Uncle Sam Will Finance the Improvements

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FHA 203(k) loans are a great tool for buyers who are looking to buy distressed, old or run down properties that require improvements.  They can also be used to finish a basement, add a room or remodel a kitchen.  These loans are perfect for buyers with more vision than cash and who want to live in the home for at least one year after taking ownership.

The financing is based on the purchase price negotiated for the home plus the cost of improvements.  FHA will finance up to 110% of the after-improved value of the home.  The buyer must come up with a 3.5% down payment.  The improvement funds are held in an escrow account and dispersed in 2-5 increments, depending on the complexity and cost of improvements.

I can see this type of financing as being perfect for first time buyers considering homes in Summit Park or Old Town.   Imagine transforming an ugly duckling in desirable neighborhoods such as Park Meadows, Thaynes Canyon, Jeremy Ranch, Pinebrook and Silver Creek into a swan.  The best part is that only 3.5% down payment is required.

If you would like more information about how these loans can benefit you, please contact me.  Thanks to Amy Sharpless and the Academy Mortgage Team for educating me on this great resource.

Why Hiring a Realtor Saves you Money

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1.     Looking for a new home or trying to sell yours?  Realtors network with one another and in today’s fast real estate market can often match buyers and sellers before a home even hits the market.  Realtors are familiar with the local inventory and know about homes that recently left the market.  This saves time and money for both buyer and seller.  Example:  A local real estate agent just showed and sold a home I recently took off the market.  This was a win-win for both the buyer and seller.

2.     Realtors know the sales process.  They understand the terms they can negotiate on behalf of the buyer; they know what is unreasonable for a seller to pay.  Example: I negotiated a $4000 credit towards a new roof for one of my recent buyers.

3.     Realtors understand property values.  Location and floor plan are not evident when viewing comparable sales.  Realtors can help sellers establish a sale price in accordance with current market values and can help buyers negotiate the best deal possible.  Example:  In a recent multiple offer situation, my buyer paid less than the highest offer because of how I positioned her in the negotiation.

4.     Realtors act as a buffer between the parties and take the emotions out of the negotiation.  Negotiations can get heated and parties can take things personally and become offended.  The realtors help smooth the process and focus on the bigger picture, which is to get to the finish line.  Example:   One of my buyers told me “I don’t negotiate with skunks”, a reference to the seller, who she decided she didn’t like.  I kept her focused on the purchase of the home and not the personality of the seller, and she is now enjoying her dream home.

5 Things to Consider When Purchasing a Vacation Home in Park City, UT

Fall Photo Rachel Sharwell

*photo by Rachel Sharwell

With property values on the rise and interest rates still bottoming out, I’ve received many inquiries from people looking to purchase a vacation home or rental property in Park City.  While the process of purchasing a vacation home is similar to purchasing a primary residence, there are a few insider tips to finding the best property.

1.     How are you going to pay for the home?  

If you have the cash to spend, you can usually negotiate a more aggressive price.  If you are financing, you need to understand the financing considerations for the property you have in mind.  For examples, there are two condominium projects in Park City where the HOA has sued the builder.   Lenders will not finance these projects.  If you are looking at a condominium with a front desk, a lender may consider it a “condo-hotel” and require a larger down payment.

2.     Are you going to rent the home when you are not using it?

Some of my clients stay in their homes during the summer and rent them during ski season.  Other clients who do not plan to be in Park City during Christmas or Sundance decide to take advantage of the potential income available during these peak season times.  Is the wear and tear on your personal belongings worth it?  That is a personal decision.

There are tax considerations, too.  The IRS has declared “if you live in your home for more than 14 days, or more than 10% of the time you rent it out in a year, then it is considered your personal residence”.  If these conditions are not met, your home will be considered a rental property and you must report all rental receipts as income.

Lastly, there are specific neighborhoods in Park City that allow vacation rentals and other neighborhoods that prohibit such rentals.  It makes sense to purchase a home in the neighborhood that allows your intended use.

3.     If you are going to rent the home, are you going to manage vacation rentals yourself or will you need to hire a property manager?

While it is tempting to keep all the rental income by renting the home yourself, there can be a lot of work involved, including checking renters in and out, scheduling cleaning, collecting deposits, etc…Park City has many quality property management companies that provide assistance to Vacation Rental by Owners (VRBO) or full, turnkey service.

4.     Does a home or condominium make more sense?

The quality of the condominium HOA association varies.  Some are well run and others are not fiscally sound.  Do the shared walls of a condominium or townhome make sense?  Do you prefer the “lock and leave” lifestyle?  These are a few considerations to keep in mind when weighing the difference between single family and condominium or townhome.

5.     What time of year will you use your vacation home and what lifestyle considerations are important?

Some clients want to be on a ski slope or nearby.  Some want to be able to walk to historic Main Street.  Others prefer more residential neighborhoods.  This is a personal decision.  Proximity to ski slopes and Main Street mean higher prices.

Purchasing a vacation home in Park City is a life changing experience.  I have many happy clients who truly enjoy their Park City homes and the Park City lifestyle.  Some would move here full time, but are tied to other locations due to careers.  The second home is the next best thing.

Should You Trust Online Home Valuations?

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I chose 5 Park City properties that closed last week.  I compared the closed price to the “estimated value” using a popular website.

  • 1226 Lowell Avenue-closed for $866,000; estimated $919,000.  Accuracy:  94%
  • 9041 Daybreaker Drive-closed for $731,000; estimated $787,000.  Accuracy 93%
  • 605 Mountain Holly Lane-closed for $2.5 million; estimated $2.3 million.  Accuracy 92%
  • 1717 Teal Drive-closed for $419,000; estimated $503,000.  Accuracy 83.3%
  • 3320 Tatanka Trail-closed for $2,089,694; estimated $2,150,000.  Accuracy 97%

In contrast to other states, where the sale price is public record, Utah is a non-disclosure state.  That means the sale price is not public record.  The sale price reported on the Park City Multiple Listing Service is not accessible to the public. I do not know what data online services use to estimate property values in Park City.

As you can see, sometimes they get it right and sometimes they get it wrong.  The home on Tatanka Trail is a Promontory Ranch Cabin.  It is a developer built home and similar to other developer built homes in the immediate area.  In contrast, Teal Drive is an older home in a neighborhood where some homes are still original and others have been improved.  I showed Teal Drive and remember that it had a tiny master bathroom and closet.  Those two qualities may not show up in a computer calculation, but clearly had an impact on the price a buyer was willing to pay for this home.

Buyers do not always think like computers.  Purchasing a home is a qualitative and quantitative experience. A home in pristine condition with tasteful furnishings, upgraded finishes, a floor plan that makes sense, views, and an easy driveway will drive value up.  Whereas a home that is beat up with older furniture, older finishes, a weird floor plan, no views and a steep driveway will drive value down.  It’s impossible for a computer program to take these items into account.

A real estate agent who has been inside a home and who understands the competing properties will be able to provide a much better assessment of a home’s value.

If you are curious about the value of your Park City home, please contact me for a complimentary valuation.  There is no obligation.

New Loan Programs Including No Money Down!

2nd Place-Rachel Watts Sharwell

The photo for this week’s blog was submitted by Rachel Sharwell.  She won 2nd place in the photo contest.

New Loan Program to Help People Recover from the Economic Downturn

First of all, good news for people who lost a home during the economic downturn. Borrowers who have had a major economic event that resulted in the loss of income and resulted in a bankruptcy and/or foreclosure or short sale may now be able to qualify for an FHA loan within 12 months from the bankruptcy, foreclosure, or short sale.

New Utah Housing Fannie Mae 100% Financing Loan-Great for First Time Buyers

This is a 100% loan without mortgage insurance.  It is another option for buyers with lower income and zero down payment.  The program includes 97% financing for the first mortgage and 3% for the second mortgage and does not include mortgage insurance payments.  This program requires $84,000 maximum annual qualifying income and is currently available only for owner occupied, single family homes in Utah.  In September, PUDs will be eligible for this loan, including popular Park City projects such as Racquet Club, Elk Run, Park’s Edge, etc..

USDA Loan Provides 100% Financing in Park City

These loans are applicable to single family homes in Park City and surrounding area.  They are part of USDA’s rural housing program. These loans have income restrictions based on household size.  In Summit County for a family of 1-4 the maximum household income is $93,450. In Wasatch County for a family of 4 the maximum household income is $84,150. The downside is that these loans can take nearly two months for processing and approval.

—Thanks to Amy Sharpless, (amy.sharpless@academymortgage.com) for providing the information used in this blog.