Real Estate Buyers in the Greater Nashville Area Beware this Problem!
There is a topic that I would really like to “discuss”. Since I do most of my “discussing” through my blog, I will start it here.
I have a file on my desk. It represents one client – a newly married couple who want to rent out their current house and purchase another home to blend their family in. They have been looking at homes for several months now in the south Nashville (Davidson County) & north Brentwood (Williamson County) area. You know – that area we call Nipper’s Corner – pretty much just south of there.
Their target price range is around $425,000. They would like a 4 bedroom home, any age, with as much yard as is possible. The home doesn’t have to be perfect. It can need some updating, as long as it is a reasonable amount of renovating (no gutting a house) and currently liveable.
This seems totally reasonable, doesn’t it? Homes come on the market every day, right?
It is true that homes come on the market every day, BUT there are SO MANY other Buyers who want the same thing that it really has been an arduous task!
In their file I have 6 offers they have submitted. SIX.
There have been bidding wars on all of the homes but two.
My clients would really like to roll in around $8,000 of closing costs into their loan. Rolling a certain amount of closing costs into a loan is not something that is unusual, but this has been the kicker in actually being able to have a Seller consider them!
My clients have been more than willing to put their closing costs ON TOP of the purchase price. For example, a home is listed for $410,000 and these Buyers have offered $418,000 with $8,000 in closing costs rolled into the loan. Time after time the answer has been a firm NO.
I have a feeling that some of you other Buyers may have been running into this situation as well.
Inherently, here are the problems:
- The house has been priced at the tippy-top part of the market, in order to maximize what the Sellers can get for their house. Makes sense in this greater Nashville real estate market where we are short on inventory and home prices are soaring.
- The Sellers are worried about the appraisal. If the house doesn’t appraise, what’s the next step? Are they (the Sellers) going to have to reduce the price of their house? Due to these questions, the Sellers become staunchly unwilling to even risk going over the listed price.
I have been helping clients buy and sell real estate in the greater Nashville area for nearly ten years now and THIS was a learning curve for me!! Never before have I seen this phenomenon in the negotiating process.
I’m happy to report that these clients are currently under contract on a lovely home in their target area with their target size yard! The house isn’t perfect – it needs some updating – but it is liveable and can be renovated in pieces over time.
There is one more hurdle which we are currently working through: the inspection and requesting repairs. As is the case with many of these homes, there is an ominous unseen Buyer in the background who has submitted a backup offer which has been accepted.
What is the big deal about the backup offer being in place? Basically, while trying to negotiate through any inspection issues with a house (and there are always issues), the Sellers know that if this doesn’t work out, there’s somebody else waiting to purchase their house that they can default to. This is what we call the “Seller’s Market”.
So here’s the word to the wise: Buyers – make your offers as clean as possible.
What does “clean” mean? Here you go:
- Be Pre-Approved. Please. Have your financial ducks sitting nicely in a row before submitting your offer.
- Offer to close on the Seller’s timetable.
- Give between 1%-3% in earnest (now called Trust) money.
- Ask for as little as possible in closing costs or other Seller concessions.
- If you suspect you will be in a bidding war, then think carefully about how much you want the house and offer accordingly.
I hope this has been helpful. This problem is not inherent to only the $425,000 price range. While it may be tough to find a home in the greater Nashville real estate market right now for the price and terms that you are hoping for, it is still possible and is worth the effort! If you have other questions on this topic, or other related real estate topics, I am always available to help. 🙂