Q: How do you write an offer to give yourself the best chance to get in a house if you are a first-time buyer?
A: You need a Realtor more than ever so they can do the comparable sales in specific areas. With the market the way it is now, I'm telling people not to low-ball their offers. I'd stay fairly close to a price that's in the comps. But if one comp is way up there, that doesn't mean you make an offer at the list price. Make sure you know what the market is. When people are making low-ball offers, I'm hearing, they are not getting the house because someone is outbidding them. Use a Realtor and make sure (the) price is comparable to what is selling right now.
Q: What can buyers do with their offers to trigger confidence?
A: Larger down payments. Whatever you've got, it's good to have it ready. A lot of people are going in with $1,000 for earnest money, but you should go with what you have. If you've got the 3 percent for an FHA (Federal Housing Administration) loan, give as much as you can if there are already offers, just to have more money on the table. Prices got so low, with lower interest rates where they are, we can afford more, so it's still (the) perfect time for people with cash — the best in the 42 years I've been in the business.
Q: How do you deliver a contingency offer that will make sense?
A: I've always said take an offer of 10 percent. If you are offering 5 to 10 percent, contingent on the sale of property, the seller is not going to pick up their marbles and run from the table. If it's not a red-hot deal, that's what I would do. In this market, from a seller's standpoint, I'd seriously look at any offer that came in and counter or split the difference. We haven't totally recovered from the bubble, but I'm not saying we might not see a little more reduction in price, and that would be potentially detrimental to sellers. For a buyer, the threat of an interest-rate increase, to me, says buy now. Because if you have a 1-percent increase in the interest rate, it would mean you'd have to get a significantly lower price to offset that payment.
Q: Are there nuances other than cash to position a buyer?
A: I'd suggest they talk to a mortgage broker that's really sharp to help them improve their credit scores. Don't cancel credit cards; keep the one you have for a long time and make little payments. That really will increase your credit score. A good mortgage broker can look at your score and give you a heads up to increase your credit score.
Q: What pitfalls do you try to avoid?
A: If you are a buyer in escrow, make sure to get your extensions. If you've got a deal in escrow, and it looks like it needs an extension, you need to do that before another offer comes in. I wouldn't sign if it looks like a better offer can come in. It can happen; it's part of the due diligence from a real-estate agent's standpoint. If a better offer comes, the buyer has to make sure he has done everything. If there is an inspection for the understructure and something isn't right, they have to go back and ask the seller to fix it.
Q: Can conditions a buyer puts on a seller be a deal-killer?
A: In the case of a simultaneous offer, if one guy wants to do his own inspection, crawl under the house and waive an inspection while the other wants an inspection, the seller could go with the one willing to waive the inspection.
Q: Do people often find they wanted a house that was too expensive?
A: If contingencies are written in, chances are they can get out unless the seller has met all conditions. Until you have a signed agreement, a buyer has the right to walk if they find something they don't like. It can be contingent on my wife's opinion or having my accountant or attorney reviewing it; I always welcome it. If they do an inspection and the seller is doing all the fixes, when the conditions are gone, the earnest money is locked in.
Reach Mail Tribune business editor Greg Stiles at 541-776-4463 or email firstname.lastname@example.org. Follow him @GregMTBusiness on Twitter.