Tallahassee real estate market has been a HOT sellers’ market for years and Tallahassee buyers are feeling beat up and beat out. We have met with a handful of fatigued and exhausted buyers recently and feel their heartache. For example, AJ was a first-time homebuyer. She and her son had been looking for a home with at least three bedrooms and two baths and under $150,000 for over a year. By the time they met with us, AJ had submitted and lost 8 offers! She was feeling defeated and ready to give up on her dream of homeownership. With our help, she found and purchased her home in time for the holidays!
Many of the things Tallahassee buyers can do to strengthen their offer happen before they even start looking at homes. Let’s talk about the 8 things you can do before you are ready to make that offer and the 6 things you should do when you bid on Tallahassee real estate with multiple offers.
HOW TO PREPARE TO WIN A MULTIPLE OFFER SITUATION
1. Meet with a real estate professional.
You can call the agent that has listed the house you love, but you deserve your own agent. The listing agent has a relationship with the seller and may even be fiduciarily responsible to get them the most money possible. Tallahassee buyers should meet with a local Realtor before crunch time and discuss your unique circumstances.
Storytime: AJ had a friend from work, who was a part-time Realtor, helping her find a home. Her friend had a big heart, but not a lot of experience. It is a giant investment of time, energy, and money to trust someone who has not been to the closing table more than you have. Besides, you deserve a professional with lots of Tallahassee real estate experience in your corner.
2. Understand your agent’s role.
Per Florida law, Tallahassee real estate agents are considered transaction brokers. That means most customers are not fiduciarily represented by the agent and that agent cannot sign papers committing the buyer or seller to a contract. Agents in the Tallahassee real estate market have been trained (often by my broker!) to have buyers sign a buyer’s representation agreement. If your agent does not have you sign one, this may be a warning sign. These representation agreements layout an agents’ duties and responsibilities to you, the Tallahassee buyer. If you want the agent to keep something confidential – here is where you put it. If you want to see what is on there before you sign (AND we highly recommend that) email us and we will send you a copy. This form is used throughout the state (unless the brokerage is a big one and has its own attorney form) and provides protection to the Tallahassee buyer and real estate agent.
3. Know your budget and your loan possibilities.
Before speaking to a lender, have a family conversation about your financial comfort zone. What is the most you would feel comfortable paying a month on a mortgage? There are also debt-to-income ratios that loans must meet. In general, spending a third of your income on housing is not uncommon and is comfortable for Tallahassee buyers. Lenders also say buyers could potentially qualify for a mortgage that is 2.5 times their yearly salary.
To prepare to make an offer, Tallahassee buyers will understand the highest amount they are comfortable offering and what that looks like in closing costs and monthly payments. Is there anything that would make you change that number you are comfortable spending on Tallahassee real estate? Are there things that would have to happen before that higher number feels more comfortable? Your lender can help you find a mortgage that will fit your budget in most circumstances. There are mortgages available with zero down payment and that might be tempting. The Tallahassee real estate that qualifies for those homes requires a drive out to the country.
4. Be pre-approved with a LOCAL lender.
The preapproval letter means that a lender has looked at your assets, your income, and your debt and has committed in writing that you would qualify for a home loan. This is important for Tallahassee buyers to compete against other offers. With this pre-approval letter will come a disclosure of your estimated monthly mortgage payment. This payment also includes the estimated taxes, homeowner’s insurance, and interest payment. Houses with a homeowner’s association will increase your monthly payment to cover the dues owed yearly to the association.
We want to stress using an experienced LOCAL lender. Tallahassee real estate has areas with quirks that can sneak up on the inexperienced lender. Even an experience lender that is not familiar with Tallahassee real estate may run into trouble that costs the buyer money. Local lenders also know the going rate for homeowners’ insurance and taxes and their monthly estimates are more accurate than out of town lenders.
Check with your lender and your agent to have a plan before you enter the competition. We work with a lender that will provide the seller a $2500 guarantee that the loan will close on time (for qualified buyers). When we put AJ into contact with one of our recommended lenders, she hit it off with her and they became fast friends. The lender was so excited to help AJ, she wrote a personal letter to the seller! She let the seller know how awesome AJ was and how that the lender had no worries about getting to the closing table. It helped us win the bid even though she was not the highest bidder. It helped that the listing agent was also a fan of this lender too. This is another good reason to use a Tallahassee local lender – reputation matters!
5. Start looking for a home in a lower price point.
Most Tallahassee buyers are looking at a highly competitive market right now and may have to consider how they will make their offer stand out in the crowd. One thing you may consider doing is to drop your price point a bit so that you are in a better position to offer more than the listing price. This also helps lower the amount of cash you need to close (a little anyway). The less you need to ask for from the seller, the stronger your offer will look.
For example, AJ was approved for a $150,000 mortgage, but those homes were not appealing to her. She was resistant to our advice to start looking in the $140,000 range. Because fewer homes in that price point met her criteria. However, after a few weeks, a remodeled home in her new price point hit the market. We saw that home immediately and had an offer within minutes of seeing the house. She offered slightly more than the list price and did not feel one bit bad or reluctant. She was watching Tallahassee real estate like a hawk and she knew this house was different. When she won the bid, she had an even lower monthly payment than she expected and was ecstatic to put those savings into her son’s college account.
6. Set your priorities in writing.
Maybe you have been dreaming about coffee on the deck while watching deer, or space for the extended family holiday meals, or maybe you just want the solitude of a man (woman) cave. This is a great time to set down your top five must-haves in a home and the five want-to-haves. Talk about which room you spend the most time in or would if you had your own place. Need a big backyard or pool because you want to be ‘that’ neighborhood house for your teens? Need space for a catio or backyard access for a furbaby? We’ve seen all these things offered in Tallahassee real estate.
Make a list and refer to it when the negotiations get frustrating. Having your priorities in writing will lower your stress and help you sort out which home is going to best meet your needs. It is easy for Tallahassee buyers to fall for a pretty face and make an offer on a home that looks gorgeous, but only has one of your priorities. That leads to buyer’s remorse, and we do not want that.
7. Check the settings on your social media accounts.
Often, buyers and sellers are curious about each other and will do a google search to see what is out there. As a Tallahassee buyer, make sure there is nothing posted on social media that will compromise your negotiations. It is easy to change the privacy settings and make your posts only available to friends. Tallahassee is a small town, there is a good chance that you will have friends in common.
Tallahassee buyers should be careful about what is there for the public to see. We had a seller that was asked to help cover the buyer’s closing costs and pointed to the buyer’s recent vacation photos posted from Greece as the reason he did not feel the need to help with the buyer’s costs. Ouch!
8. Do not be pressured, and don’t drag your feet either.
It is easy for Tallahassee buyers to get caught up in the competition and be more concerned about winning the bid than whether the home meets their needs. Do not feel pressured by your agent, the seller, or the sellers’ agent to make an offer that is outside of the comfort zone you set before you started looking at homes. Experience tells us that this situations leads to Tallahassee buyer’s remorse.
However, in Tallahassee’s real estate market, if you sleep on it, there is a good chance you will not sleep in it.
How to Make an Offer Strong When Buying A Tallahassee Home.
There are many things the Tallahassee buyer can do to make a strong offer. Sellers are looking for the best deal for their family’s and want an easy transaction (because – who doesn’t?). The more you can lower the seller’s uncertainty about getting to the closing table, the more likely you will win the bid!
1. Talk title and closing when drafting the offer.
This title agent, or attorney, is one you will meet at the closing table. They will notarize your signature on a stack of paper. Closing is the official term for the transfer of ownership from the seller to you, the Tallahassee buyer. Choosing a local title and closing company with an excellent reputation will help ease the seller’s mind that this transaction will be an easy one.
Many closings for Tallahassee real estate are handled by title companies, some of the biggest are law firms. Title insurance is an insurance policy that lenders require borrowers to purchase for the lender’s protection. Title insurance protects the policyholder from any claims against the property. The most common things are missed liens or bad legal descriptions. We recommend getting an owner’s title insurance policy to cover your interest too. Cash sales do not require the buyer to purchase title insurance. However, we do recommend it.
The Tallahassee real estate market sees a fair share of homes that have been inherited. Sometimes they have a working relationship with a real estate attorney who has helped them through the probate process. The sellers may request that the Tallahassee buyer choose that attorney to work with to close the home. It is the buyer’s decision, but if the agency is reputable and you have a title policy, it is safe to choose the seller’s recommendation.
2. Review contingencies.
Generally, in Tallahassee real estate, we do not see many buyers waiving inspections or financing contingencies. You can. It is your decision, but this is not a place we would recommend cutting out. The contingencies are there to protect the buyer. The seller knows a lot more about the house than the buyer in almost every circumstance. The buyer has an inspection period to make sure that the house is in the condition the seller is saying it is in. Due diligence too important to pass up when investing in Tallahassee real estate.
The only time we have ever closed on a home without an inspection was when we are working with investors. Investors can look at a house and calculate the damage to their wallets for all the repairs. Most Tallahassee buyers do not have that luxury.
3. Consider writing a personal letter to the seller.
These letters have helped countless Tallahassee buyers win the offer in our competitive real estate market. Especially if the buyer shares characteristics with the sellers or can otherwise make an emotional appeal. Everyone loves a good story. Write your story in an entertaining or heartfelt, way that will appeal to the sellers. Check out their social media feed to see if you have anything in common with them. Be careful not to reveal you know this because of cyberstalking them because that is creepy.
Some attorneys are telling sellers to no longer ready buyers love letters because it could put the sellers in danger of violating fair housing laws. This has led to some Tallahassee listing agents no longer accepting personal letters to sellers due to the risks of a bitter buyer suing the seller. If the personal letter reveals information that puts the buyer in a protected class and their bid is not accepted, some sellers fear having to protect themselves in court from accusations of bias for selecting another offer.
4. Make the seller a good offer.
If you are a Tallahassee buyer looking for a home in the northeast corner, you are probably going to have to pay the list price or more to win the bid. In the fall, Tallahassee real estate cools down. If you need to buy that house at less than the list price, make your offer in the winter when there are fewer home sales. Some sellers MUST sell and there are fewer Tallahassee buyers to make offers.
Also, do not ask the seller to cover your closing costs. If you need the seller to pay your closing costs, offer them more in the asking price to cover what you are asking them to spend on you.
5. The Earnest Money Deposit
The earnest money deposit (EMD) is the amount of money the Tallahassee buyer gives to the closing agent to show their interest and ability to purchase the home. The title agent holds this money in escrow until the contract closes or terminates. If the contract is executed or terminated within the deadline, the money belongs and returns to the buyer. If the buyer backs out of the purchase after their inspection period or fails to qualify for the loan, this money goes to the seller. The higher the amount of the earnest money deposit the stronger your offer. In the Tallahassee real estate market, the EMD is often somewhere between 1% – 4%.
An EMD is not required for an offer to be submitted or accepted. However, most Tallahassee sellers want to see the buyers have some ‘skin in the game.’
6. Send the seller the signed disclosures with your offer
This is a small thing but something that helps put the seller’s mind at ease. As buyers’ agents, we send all the disclosures available for signature along with the offer the Tallahassee buyer wants to make. This tells the seller that you have read what they have provided and understand the condition of the house. Informed Tallahassee buyers feel more comfortable with offering ‘as-is’ contracts and that also eases seller’s minds. Addenda can be incorporated into the contract by checking a box on the last page. If these addendums are not signed by both parties, the buyer can walk away from the contract up to the day of closing and still receive their binder deposit back. The seller has less risk when all disclosures are submitted right away.
7. Type of financing
More retired Midwesterners are moving to Tallahassee and that means we have seen more cash sales in recent years. If you are offering cash, send a proof of funds letter with your offer. Cash is still king in real estate.
When it comes to financing, Tallahassee sellers prefer conventional financing over other forms of mortgages. Conventional financing is more difficult for buyers to qualify for and indicates a buyer in a stronger financial situation. Stronger buyers are more likely to get the seller to the closing table.
VA loans are the golden ticket for our veterans, but they do need a clean wood-destroying organism report. If you are using a VA loan, you may consider offering slightly more to cover the cost of the WDO repairs. Many VA buyers stick to looking at only brick homes and fortunately, Tallahassee has a lot of them.
Most Tallahassee buyers use FHA loans, especially for first-time homebuyers. Compared to VA loans, there are fewer conditions the property must meet. The appliances must work and some lenders required a clean WDO inspection report.
For the Tallahassee buyer who wants to get away from the town, USDA loans can be used on rural properties and have zero down payment requirements. In Tallahassee, many homes outside of the secondary “Capital Circle” will qualify for USDA financing. Check the USDA site to see if the home you are considering would qualify: https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp
We see many sellers asking Tallahassee buyers for time to locate a new home. If you are flexible, this may be worth thousands in the offered price to the sellers. Some Tallahassee buyers are in a position that they do not need to take immediate occupancy and can offer to lease the home back to the sellers after closing for a limited period. Some sellers want to close as quickly as possible. Make sure your Realtor calls the listing agent and asks, besides price, what the seller’s top priorities are when reviewing offers. That simple phone call can make a world of difference in a competing bid situation when buying Tallahassee real estate.
Can a Tallahassee buyer make an offer on a house that is already under contract?
Yes. In fact, about a third of all Tallahassee real estate offers fall through or terminate instead of closing. In case you do not win the bidding war, ask to be the backup offer. Being the backup offer means you will be called first if the current offer falls apart. That could mean you get a free inspection report too. For the sellers, they do not have to go back to the market if the first deal falls through. This means they will not have to explain to potential buyers what happened to the first offer. It always looks bad for the seller.
Can a Tallahassee buyer outbid an accepted offer?
We hear this question a couple of times a year. The answer is always no if you do not ask, so ask. As listing agents for a home in a very popular Tallahassee neighborhood, had buyers approach us to offer the seller $10,000 more than the current offer. These professors had cash and were willing to waive the appraisal contingency and give the current buyers $5,000 to terminate their contract and walk away. The sellers were willing, but the buyers did not want to terminate even though they were still in their contingency period and would not have lost their earnest money deposit. In theory, it would have worked, but it does not happen often. Still have questions? Check out our Tallahassee buyer’s negotiation page: https://livingintallahassee.com/buyers/home-buyer-negotiations.html