Today I am starting a new journey with a first-time home buyer and thought I would share the letter I wrote to them. In this market we have a couple of scenarios – in the city we are still seeing a lot of pressure and escalations, and so many buyers are moving north (and south) to find homes. For this reason, my buyer has decided to look in a bit north, and so I both researched the area online, and previewed a few homes yesterday. I also called one broker to find out how much interest he was seeing in his listing as it has no offer review date. He did say that some listings are seeing a lot of competition, and he has one very interested buyer in his listings.
Thus, I wrote this email:
I hope you two are doing well this morning!
I’m excited we are finally on the journey of finding you a home, and thought we might need to go over the process a little more.
We can also have another meeting to talk about some of these details, but for now I want to point out a couple of things, and have also attached a “buyer packet” that I have developed. Please let me know if you can open it 😊. I will also print one out to bring with me on Sunday.
It is missing a couple of things that are important in today’s market.
At this time there are very few homes on the market (low inventory, seller’s market). Because of this, many buyers may look at one one home and want to make an offer on it.
For this reason, there is a set date and time when the seller and their broker are looking at offers.
This can create competition and so the offers have a page called an “escalation” clause which sets the highest price the buyer will offer.
This means, if you see a house with an offer review date, we need to be prepared to escalate (usually $5,000 at a time). We can escalate to the amount you were approved for (taking into consideration your down payment, etc.)
Also, we need to have an inspection. An inspection can cost up to $500.00 each time, depending on the size of the house.
In a competitive situation, it is often expected that the inspection be done in advance (a pre-inspection).
To put this in terms of what you have been sending me, for example, a couple of the sellers are looking at offers on December 4th. If we see a house you want to put an offer on Sunday, then I would recommend hiring an inspector to look at it as soon as possible.
On the other hand, the one home has no offer review date (more traditional) and so can take an offer anytime. In this case we would put in an offer with an “inspection contingency” and then, if our offer is accepted, we will then hire the inspector. If everything is fine with house, we can go ahead. If the inspector finds something wrong, we can negotiate or pull out.
There is one more scenario. You may find a house that has been on the market for awhile that you like. This house might not require much negotiation, and may accept a lower price.
In summary, we can approach our journey keeping these three scenarios in mind, and find a home you will love to live in for many years.