Home Buyers: Are You Making a Real Estate Contract Offer,
or Do You Really Want to Buy the Home
Wilmington, North Carolina?
Home buyers are out looking in the Porters Neck area and throughout all Wilmington, in Leland, in Hampstead and all over North Carolina.
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Home buyers are making contract offers in Wilmington, North Carolina.
Home buyers are purchasing homes in Wilmington, North Carolina!
There is a shortage of listing inventory coming on the market in almost all areas of Wilmington, Leland and Hampstead. This has created urgency for home buyers. There is the urgency to see the home quickly as new listings are now getting immediate viewing attention and many home owners are receiving contract offers within days of placing their home on the market for sale.
Mortgage interest rates are still at historic low levels, with some buyers obtaining 30 year mortgage rates under 3%!
And there is the Law of Supply and Demand and the effect on home prices. Will this situation create higher sale prices? Economics 101 says it should!
Home buyers have competition! And that competition is other buyers looking in the same area and in the same price range. The reality for home buyers is that only one buyer can purchase the home. While that sounds simple enough, it gets complicated when more than one buyer likes the same house and more than one buyer submits a real estate contract offer to buy the home.
First and foremost, in today’s real estate market home buyers need to act promptly if there is a home they see and have real interest in. They should see the home a second time to be sure they have an interest in it. A second viewing enables a closer look, looking beyond the owner’s personal décor. And if all goes well, buyers need to act promptly in deciding whether or not to submit a contract offer.
Some Background Information:
A Buyer’s Agent can ask the Listing Agent if there are offers currently being negotiated or if they are expecting to receive contract offers. Yes, the ideal scenario is that there are no other contract offers being negotiated nor other offers being prepared. But what if there other contract offers waiting to be received and or presented? If so, that may change how a buyer moves forward with their planned contract offer.
Standard of Practice 1-15
REALTORS®, in response to inquiries from buyers or cooperating brokers shall, with the sellers’ approval, disclose the existence of offers on the property. Where disclosure is authorized, REALTORS® shall also disclose, if asked, whether offers were obtained by the listing licensee, another licensee in the listing firm, or by a cooperating broker. (Adopted 1/03, Amended 1/09)
What if there will be multiple offers on a home a buyer has interest in? The buyer’s agent can be a valuable asset in explaining the process of presenting a contract when there are multiple offers being submitted. Buyers need to understand that a seller has options when presented with multiple offers. They can accept one contract as submitted, make a counter offer to some or all buyers or just refuse all offers without even making a counter offer. Yes, there is the possibility that a buyer does not get a second chance in increasing or revising their original contract offer! Again, the buyer’s agent can be a valuable asset in explaining the process and in making recommendations!
Per North Carolina Real Estate Commission, where a broker receives multiple offers on a listed property about the same time, all offers should be presented to the seller at the same time. The broker should not present one offer to the seller and withhold a second offer until the seller makes a decision on the first offer. In this situation, it makes no difference which offer was received first, or which offers the highest price, or which company procured the offer. It also makes no difference whether the offer has been submitted through a seller’s agent or subagent or a buyer’s agent.
Since July 1, 2008 , Commission Rule 58A.0115 which states: A broker shall not disclose the price or other material terms contained in a party’s offer to purchase, sell, lease, rent, or to option real property to a competing party without the express authority of the offering party.
Real estate contracts consist of three major components: price, terms and conditions. And yes, there are times when price is not the most important factor in determining whether or not a contract offer gets signed or rejected. For this article, let’s concentrate on the buyer’s initial offer if there are multiple offers to be presented to the seller.
Home buyers need to realize that they need to show the seller they want to buy their home. If a home is realistically priced according to the market, why would a buyer think they can make an unrealistic low offer to start with in situations where a home is newly placed on the market and there are multiple offers? A buyer needs to know that they may not get a second chance to revise and increase their offer. Their initial contract offer could just be placed aside by the owner who then negotiates with the other buyers who appear more sincere by the amount of their initial offers. And this has been happening in the current market. Again, there is more to a contract offer then price, but for here let’s just concentrate on price.
Why wouldn’t a buyer want to start out with an offer that shows the owner they want to buy their home, especially if they want to buy the home, and when they have been frustrated in making offers previously that have not been accepted and perhaps losing to another buyer. While that negotiating strategy of starting low was common in recent years, the real estate market has changed and buyers must adapt to the change in how they think about contract offers and contract negotiating. Why start with a contract offer that in all likelihood will not be accepted? It increases negotiating time and increases the likelihood of other buyers seeing the home and making contract offers.
In the past, a buyer could lose out in negotiating and the next day another home would appear on the market that also interests them. However, that is not happening in the current market place for home buyer’s today.
Yes, there are buyers who start with a full price offer on a home they want!
Yes, there are buyers who start their negotiating with an initial offer over asking price on a home they want!
These buyers have decided that they want to buy the home, not just make a contract offer!
David Fialk, Realtor Emeritus
C2EX, CRB, CRS, ABR, GRI, e-PRO
Licensed Broker Salesperson North Carolina and New Jersey