A surge of home buyers across the Wasatch Front is creating a buying frenzy. How do you make your
client’s offer rise to the top?
By Dave Anderton
It’s no secret that the Wasatch Front housing market has more buyers than sellers. An influx of out-of- state buyers, combined with Utah’s natural increase, is driving the population skyward. Carlye Webb, an associate broker with Summit Sotheby’s International Realty, recently listed a $290,000 townhome in Herriman City. Within 24 hours, there were 24 offers. The winning offer went for $26,000 above asking price.
“Since obtaining my real estate license in 2004, I have never seen a stronger seller’s market,” Webb said. “It can be scary for buyers, which is why it is imperative they are represented by a professional Realtor®.”
Most out-of-state buyers arriving in Utah are coming from California. “Even before Covid-19, California’s population growth had slowed considerably,” an article in Cal Matters declared. “From July 2018 to July 2019, California saw a net loss of 197,594 people to other states.” A number of websites, like LeavingTheBayArea.com and LeavingSoCal.com, have popped up to show the financial incentives of saying goodbye to California. The Orange County Register recently ranked Utah as the No. 8 state for the ratio of “ins-to-outs.” Utah receives 191 arrivals from California for every 100 Utahns moving to the Golden State.
A surge of home buyers is creating a buying frenzy, as dozens of people compete for the same listing. That means multiple offers are commonplace, especially on homes priced under $700,000. Here are five ways to make your client’s offer stand out from the crowd.
1. Relationships Matter. Developing a relationship with a listing agent and finding out what the seller wants are crucial, according to Nigel Swaby, a Realtor® with Aubrey and Associates Realty. Agents that know each other are more likely to trust each other. “You want to establish that you are a good communicator,” Swaby said. “If there are details to be worked out, it’s best to call first and then follow- up with emails and texts.” A buyer’s agent should always call a listing agent prior to making an offer and make a call after submitting an offer, Swaby added. “If you do a good job during a transaction, it will be remembered in future transactions when you meet again,” Swaby said. “If you have a bad transaction with somebody, you will not want to do business with them again.”
2. Non-Refundable Earnest Money. Earnest money, the money paid when going under contract, shows how serious you are about buying a house, said Randy Curtis, a Realtor® with Jacobsen Real Estate. Large earnest money deposits tell the seller you are committed to the transaction. In a multiple-offer situation, Curtis recommends an earnest money offer of at least 3 percent of the asking price of a home. “Overall, we are seeing larger earnest money deposits,” said Terrie Lund, sales manager at U.S. Title Agency. In addition, a buyer can make all or a portion of the earnest money non-refundable. “If they are making the earnest money non-refundable, it makes the offer stronger to the seller,” Lund added. “It shows the seller they are very serious about purchasing the home and they have their financing in line.”
3. Offer More Money or a Short-Term Lease. For homes priced under $500,000 it is common for offers to start at $15,000 to $30,000 above asking price, according to many Realtors®. However, if the appraisal doesn’t meet the purchase price, buyers may have to make up the difference with cash. Jodie Osofsky, a Realtor® with Signature Real Estate Utah, recently represented a buyer who made an offer that was $100,000 above asking price on a $650,000 home. Fortunately, the home appraised at $750,000. In addition, the buyer offered the seller a 60-day short-term lease back for $1. “The seller was remodeling their new home and didn’t want to be displaced,” Osofsky said. “There were at least three offers higher than my client’s offer. My client was the winning offer because we knew the seller’s needs and were able to accommodate them to stay in the home.”
4. Escalation Clauses. Escalation clauses automatically raise the buyer’s offer by a predetermined amount. Webb said she recently used an escalation clause to help two of her clients make winning offers. However, Webb cautioned that escalation clauses should be worded carefully. She suggested using an attorney for specific language and adding an appraisal clause specifying if the buyer is willing to pay the difference between the purchase price and appraised value, should the appraisal come in lower than the agreed-upon purchase price.
5. Tight Deadlines/Fewer contingencies. In normal times, due diligence typically takes 10-14 days. In today’s market, tight deadlines are more attractive. Offers with due diligence periods of seven days or less are more competitive. Yet, with so many people buying homes, appraisals and underwriting are
backed up. Osofsky said she recommends 25 days to complete an appraisal. Contingencies, such as offers subject to sale of a buyer’s home, may put an offer at the bottom of the pile.
“It’s a battlefield,” Webb said. “I have not had a single buyer or seller that wasn’t in a multiple-offer situation since March.” But sometimes an offer that is not the highest or best offer wins the day. Webb emphasized that professionalism matters most. “How an agent presents the offer is a big deal,” she said. “Communication skills win offers more than anything.”
Dave Anderton is the Communications Director of the Salt Lake Board of Realtors®.