Multiple Offers on Mission Viejo Homes
Are you willing to write a blank check as a buyer in Today’s tough Mission Viejo Real Estate Market?
In a real estate market where multiple offers are the new normal, are you willing to risk taking on an unknown expense on top of everything else you have to pay for to buy a home in Mission Viejo today? Here’s what’s going on – see if you’d be willing to agree if you were in this situation.
When there are multiple offers to buy the same home, the seller has a strong bargaining position. While you may think the photo of your family – kids, grandparents, aunts and uncles – bring on the whole gang- may cause the seller to pause for a moment and picture your happy family taking over the memory making in their house, that moment comes and goes in a flash. A flash of green, that is, when the snap out of it and realize they are making a business decision. Your fluffy kitty and dashing doggie won’t even distract them long enough to tear away from the spreadsheet that calculates how much will go into their pocket. And the now seller’s have their strategy to consider.
What if you get two full priced offers, both from buyers fully pre-approved for a home loan? Both from lovely families you know your neighbors will be able to train into a great contribution to the street. How do you respond? One popular tactic sellers are using these days is to see how high buyers are willing to go. To find out how much people are willing to pay for the house. And even though the extra amount will amount to a few more dollars each month on the buyers’ home mortgage and a few more dollars in the down payment, the extra amount is usually thousands extra to the seller. Why leave that sitting on the table if it’s what the market will bear. And just so we are clear, you buyers today and the ones who tell us what the market will bear.
What if you are willing to pay a little bit more, to take advantage of almost free money and low home costs? But there’s a catch. There’s the appraisal that comes into the picture. Your lender cannot make a loan to purchase a house for more than the appraised value. So if you are willing to pay $500,000 but the appraiser says the house is worth $480,000 – you can only borrow 80% of the $480,000. And the other $20,000 needs to come from somewhere. It’s not that the bank won’t let you buy a home for more than the appraiser says it’s worth, they just won’t help you out. You have to figure out how to make up the difference. With me so far? I know it’s a little early for so much math.
So the bottom line here is that many sellers are stipulating that if the buyer is willing to pay more than the list price, and the appraiser says the house is worth less than what the buyer is willing to pay, they buyer will make up the difference. Sellers are asking you to agree to write this blank check up front. They don’t want you to be surprised or come back to them for the money if the appraiser sees the value differently. So, are you willing to write a blank check to be a winner in this market? Would it surprise you to learn that many buyers are willing to take on this unknown, added expense? Game on.
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