Limited inventory, low interest rates, cash-rich buyers, families leaving the cities, more people working from home…all created a feeding frenzy for lakefront properties in East Tennessee. It’s not unusual for any new lakefront listing to have multiple offers.
So how can your offer stand out from the crowd? Follow these tips below to ensure your future lake life!
HOW MUCH TO BID
When we are asked by buyers how much they should bid, we often answer with a question: “How much are you willing to lose it for?” You should be comfortable with the price you are offering based on the location, comparables, future value after renovations, lake amenities, neighborhood, etc. Our CALCULAKER tool is a good starting point for market value. And your East Tennessee lakefront specialist buyer’s agent can provide the most recent price per square foot costs. In this market, don’t mess around…come in with your best offer right away! You may not get a second chance. This is no time to tread lightly…be as aggressive as you’re comfortable with. Again, how much are you willing to lose it for?
CONTINGENCIES
Offer price is only one part of what seller’s consider when reviewing offers. Terms and conditions are just as important. Sellers want their sale to be quick and easy. Buyers with home sale contingencies in their offer are a near impossible sell in this market. So, if you absolutely have to sell first to buy, at least get your current home under agreement with a “contingent on seller finding suitable housing” clause in your contract. This will buy you some time and make your offer more attractive to your lakefront seller.
Home Inspections can be another cause of anxiety for East Tennessee lakefront sellers. Many buyers are waiving their rights to home inspection in this market. If I were a buyer, it’s not the little thinks I’m worried about, it’s the big things! So, I would bring along a friend at the first or second showing that has construction and/or building experience. They would be able to let you know of any obvious structural problems or red flags you should be aware of. But that’s no substitute for a professional home inspection…so if you not comfortable waiving it, then keep it in the contract.
In a hot market, bank appraisals can be interesting for both sellers and buyers. Just because buyers are willing to paya higher value for an East Tennessee lakefront home, doesn’t mean the bank will agree with them! If you’re a cash buyer or putting a substantial amount down (50% or more), then you may want to waive the appraisal clause (please consult a qualified real estate attorney for advice and risks). If you are getting a conventional loan, be aware that your offer and the banks appraisal may not match. If the appraisal comes in low, you need to make up the difference in cash OR renegotiate your offer price on the lake home. Obviously, this puts you in a weaker offer position than your competition.
CASH VS. LOAN
Do cash offers provide a real advantage over a buyer with a mortgage contingency? It really depends on the individual lakefront seller. The only advantages to the seller may be a shorter closing time and fewer contingencies. That may or may not be important to the seller. If they are getting a higher value from a buyer with a mortgage, then that may be best for them. The opposite may be true for other sellers. Therefore, it’s important to try and understand the motivation of the sellers. That’s where a qualified buyer’s agent is key (see below).
QUALIFICATION
I can’t count how many times we have buyers say to us: “Pre-approval won’t be a problem” or “we’re cash buyers, so it won’t be a problem”. The real problem is, now it’s Friday night and you just viewed your dream lakefront home. You need to put an offer in tonight and you can’t get a preapproval until Monday. Say goodbye to your dream home! PLEASE, PLEASE, PLEASE get pre-approved prior to viewing homes! This is a devastating lesson to learn the hard way… and yet we still have one of these every week. AND…if you’re a cash buyer, be sure to have a “proof of funds” statement printed out and ready to submit with your offer. By the way, be sure they are liquid funds and available immediately. Sellers will not, and cannot, “take your word for it”.
LAKEFRONT SPECIALIST
If you are not working with a qualified lakefront specialist Realtor as your buyer’s agent, you will have a hard time overcoming your competition! Many buyers think if they work directly with the seller’s agent, they will have a better chance of their offer being accepted because the listing agent will get paid more. It just doesn’t work that way; first, the seller’s agent does NOT work for you, their fiduciary responsibility is to the seller. Same for for sale by owners or FSBOS, it is necessary to make sure that you not only choose someone qualified with knowledge about East Tennessee lake areas and communities, but also someone who has your best interests in mind and will help you ever step of the way!I
Lakefront property is different than any other real estate so be sure they have lakefront experience. And remember, you get all their knowledge for free…the seller pays their fee. You are not only buying a lake house, you’re buying a lake and a lifestyle.
Ask us about our 16-page “Lakefront Buyers Success Guide” to help guide you along the way! Contact our Tennesseee office HERE. Best of luck!
Reposted by Kody Millikan, Lakefront Living Realty TN
Original article posted by Scott Freerksen “The Lake Guy”