Sacramento Real Estate Views

How To Get Your Offer Accepted!

Results of Sold Homes Survey in North Natomas

I’ve got a buyer who I just love working with.  As much as I like he and his girlfriend, they are depending on me to get them into a home for the holidays.

This used to be a pretty easy task.  You find a home, write an offer that’s attractive to the seller and off you go to escrow.

Now, not so much!

Dramatically Low Inventory Levels

As the foreclosure crisis churns on and banks are releasing fewer of the foreclosures to the open market for whatever the reason, the number of available homes for sale has decreased dramatically in the last year.

This has created a fiercely competitive market for buyers and sellers are, again, enjoying getting their listing prices as high as appraisers will allow them to go due to multiple offers on almost every home.

Days on market, depending on the area and price range, has declined as well.

The declining amount of homes for sale is why you’re currently having trouble getting your offer accepted.

Agents are communicating with each other only to the extent of “give us your highest and best”.

Beyond that, mum’s the word.  As a result, it then becomes a mystery has to how to structure an offer that gets accepted.

Until now!

Sold Homes Survey

Feeling like I needed to become more aware of the market and what’s getting accepted, I conducted a survey of a random sampling of homes that have sold since August 1.

My focus was the terms of the offers accepted and an interesting pattern emerged that surprised me some and didn’t surprise me at all.

In Summary

I selected 45 homes that have sold in North Natomas since August 1 with the following characteristics:

Beds/Baths = 4 / 2.5

Square Footage = 2164

Average List Price = $240,298

Average Sold Price = $242,000

This is the basic home my client is looking for.  He’s financing and not paying all cash.  I wanted to know what’s getting accepted so I could help him.

The prevailing myth is that all financed offers are getting beat out by all cash offers.

This isn’t always the case.

There is also a prevailing myth that FHA offers aren’t getting accepted.

This isn’t the case.

Another myth is that the listing agents are selling their own listings and bouncing everything else out.

Not true.

The following table is the results of the financing portion of the offers that have been accepted so far as I can see.  I can’t see all the terms but this should enlighten anyone looking for answers about what’s being accepted.

Of the 45 sold homes sampled:

Cash	Conventional	FHA	FHA w/credit back	VA	Double Ended*
10	21	9	4	1	10*

*Of the homes sampled, agent or broker represented both the seller and the buyer.

What this table shows is, more than likely, your offer is getting beat out by better terms and that doesn’t mean just price.  There are 3 times more financed offers than there are cash offers accepted.

Terms

Getting your offer accepted isn’t only about offering the highest price but it’s also about netting the seller the most amount of money.  In fact, here is something new in the market that’s going on now.

Because there are many homes that aren’t appraising for the agreed upon price, listing agents are getting a rough determination of what the home should appraise for and then adjusting all offers over that amount down THEN doing a seller “net” sheet to ascertain how much the seller would make from the sale.

What this means is that simply pricing your offer up over asking is not enough.  Asking for a credit back for closing costs is a thing of the past right now.

Only 4 of the 45 homes sold, as recorded by the listing agents, got a credit back from the seller for closing costs.  This information suggests that the strongest offer looks something like:

1) Conventional financing.

2) 20% or more down.

3) No credit back from the seller for closing costs.

4) Buyer pays all costs at closing.

5) Offering price slightly above where the comparable sales suggest the home should appraise.

6) The largest deposit possible.

Not willing to pay all costs?  Prepare to be disappointed and for it to take longer for you to get into a home.

FHA Offers

The majority of the money out there available for lending is from FHA.  A strong FHA offer will differ from a conventional offer in the following ways:

1) Down payment will be less, could be as low as 3.5% of the purchase price.

Other than that, structuring the FHA offer the same as the conventional is what is getting approved.

Now the bad part for the FHA buyer.

Who’s Paying More?

While running the information here, I thought I’d also run whose paying the most for a home in the sampling I pulled.  Percentages are the average over the listed price of the home. They are:

Cash	Conventional	FHA
101.75%	99.80%	111.46%

Surprised?  I was. This gives you an idea of where you’ll need to be in order to get your offer considered.

I hope it helps you to structure your offers accordingly in this the toughest of all markets that I’ve seen.  The good news is that in 60 to 90 days, it will be different.  Let’s hope there are more homes to sell.

Wishing you joy and abundance!

Thanks for visiting!

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Tags: homes for sale in sacramento

This entry was posted on Thursday, November 12th, 2009 at 9:09 pm and is filed under First Time Home Buyer Info, Your Questions Answered!. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1. sac.voyagehomeloans.ca said at November 19th, 2009 at 4:03 pm

   Great information!

   The main reason banks are not releasing those forclosures on the market is to create demand. thats my opinion. Theory is 101 economics “supply and demand”. i know for a fact the prices would tank more if the banks released all the foreclosures. Secondly, being in the lending business, I am coming across more people that are sacramento city employees who are having a very hard time making there payments due to the 15 % decrease in the income.

   The interest rates are for sure the lowest on any kind of mortgage product. i would agree the Fha loan is expensive but sometimes its the only product that works. everybody is not fortunate to get a conventional loan.

   Sam
   voyage home loans

2. robsaxe said at November 19th, 2009 at 8:34 pm

   Thanks for the comment Sam. I appreciate it.

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