Hi! Newbie investor here. Looking to start by house-hacking in Utah, but the market here is wild right now -- prices are climbing and buyers are paying significantly over appraised value. I've had 4 offers not accepted. My most aggressive was offering 55k over the asking price (390 for one listed at 355), but the house went to someone who was willing to waive the appraisal contingency. Wondering if anyone out there is also dealing with the Utah market, or somewhere similarly competitive. Any thoughts on where to look to avoid competitors who have the cash to pay over appraisal?
Real Estate Broker · Salt Lake City & Oklahoma City · Member since 2018 · 3k+ posts · 2k+ votes
5y
Hi @Benjamin Reneer, welcome to the BiggerPockets forums! I'm sorry you're having this trouble, and yes this is happening all over the SLC metro. It's been hot for a while and the inventory squeeze along with the nationwide relocation shuffle happening are putting more pressure on the Salt Lake MSA as a whole, especially Salt Lake County.
I think a fundamental retooling of how we think of offers is in order. I did a video on this recently (here) and it's the best way I've come up with to pursue homes in a way that allows me to sleep at night AND have a solid shot at winning.
Real Estate Broker · Salt Lake City & Oklahoma City · Member since 2018 · 3k+ posts · 2k+ votes
5y
Hi @Benjamin Reneer, welcome to the BiggerPockets forums! I'm sorry you're having this trouble, and yes this is happening all over the SLC metro. It's been hot for a while and the inventory squeeze along with the nationwide relocation shuffle happening are putting more pressure on the Salt Lake MSA as a whole, especially Salt Lake County.
I think a fundamental retooling of how we think of offers is in order. I did a video on this recently (here) and it's the best way I've come up with to pursue homes in a way that allows me to sleep at night AND have a solid shot at winning.
Investor · Cincinnati, OH · Member since 2018 · 304 posts · 185 votes
5y
Tough market on the MLS. Try waiving inspection contingency if you are comfortable with that. Consider off market properties to eliminate the competition, I suggest a forum search for methods of finding these
Salt Lake City, UT · Member since 2018 · 219 posts · 182 votes
5y
@Benjamin Reneer
The market is crazy here! The best strategies I have found to help my buyers is to make multiple offers on the same property.
For instance, you could offer $10,000 over, $5,000 earnest money and not subject to inspection but still subject to financing.
$20,000 over with $2,000 earnest that goes hard upon acceptance. Knowing if appraisal does not come in, you may have to put down the difference or back out and lose your $2,000
Then I have my buyers offer cash all the time. I arrange the hard money and the lender gets the process going so that they are ready to “refinance” the property within a few weeks of closing with hard money. So full price cash with no contingencies. Less than the financing offer so that after hard money costs you are still paying the $10,000 above asking, after you add in your hard money costs.
Adding an escalation clause to your offer is another strategy when you are certain you are in a multiple offer situation.
Depending on the specific property a seller may prefer one over the other. I see Love letters frequently submitted with offers as well.
I recently helped someone purchase a property that had 19 offers. He was 2 of the 19. The seller chose his Cash, no contingencies offer over a conventional loan offer that was $10,000 above the cash one. All other terms the same. That particular seller was willing to take $10,000 less to close in 7 days as opposed to 28.
Making multiple offers on the same property helps appeal to different personalities and circumstances of the sellers and also compete with different types of offers!