It’s been said many times that “timing is everything“. And if we take too long to find that perfect moment, the moment can be lost. This is especially true in real estate. Let me explain why this is important if you are buying a home.
Why Timing Matters for Home Buyers
Throughout the home buying process there are distinct “windows of opportunity“. Home buyers can miss out on these moments if they are not attuned to the fast moving landscape of real estate.
Are you thinking how is this possible with average mortgage rates surpassing 6.0% (fixed rate 30-year mortgage)? Hasn’t the housing market slowed down with average days on market (DOM) increasing? If this is a head-scratcher for you, consider the fundamentals of real estate.
Indeed the higher mortgage rates have caused some buyers to pull back and put their home purchase on hold. This translates into a smaller buyer pool. And traditionally, the September through December housing market has overall less buyers looking for a home. Yet the buyers who are house hunting right now are serious and have a sense of urgency. And this means that there is strong buyer demand. If we look at the available inventory of homes which has seen an uptick after Labor Day, many of these homes are priced more realistically than the aspirational prices characteristic of the frenzied housing market spurred by the pandemic.
The combination of continued buyer demand and current supply of well-priced homes will yield high buyer interest for those homes that show well. Keep in mind that all it takes is for two buyers at the same time who want to make an offer on the same home to create competition. And for those home buyers competing for the same house, the housing market is “fast-moving”. And that is why I say real estate is all about timing. (You can also take a look at my article last month for additional insight on buyer competition: Home Buyers are Asking, “Bye Bye Bidding Wars?”)
Here are a few examples.
Sometimes, a seller cancels a Sunday open house. This could be a signal that the seller has already accepted an offer. On the other hand, it might just mean that the timing didn’t work for the seller, e.g. perhaps the seller was having family visit from out-of-town. Why is this relevant for home buyers?
In this scenario, the house is still active on the market and home buyers need to act quickly to seize this window of opportunity. The home buyer needs to pivot and schedule a showing appointment, sooner rather later. And this is exactly what my client did when we found out that the open house had been cancelled. I called the listing agent for clarification and it turned out that the sellers were arriving home from a trip in the afternoon of the day the open house had been originally scheduled. The timing didn’t work for the sellers to have an open house. However, it was possible to arrange for a private showing on Sunday morning which was the first day the house could be seen. Fast forward, my buyers were able to to see the house Sunday morning before the sellers got home. My buyers quickly made a very strong offer which the sellers accepted. Other would-be buyers who were counting on attending the open house, missed out on a home buying opportunity.
Home Buying Tip #1:
* Schedule a private showing, rather than rely on the open house.
Using Speed to Create a Window of Opportunity
Here is another scenario where the speed in seeing a home can benefit the buyer. If a property looks like it is going to generate a lot of buyer interest, there may be a “window of opportunity” if you are house hunting. Many homes that come onto the market are launched on the day of the Broker Open, a reserved time for realtors to preview the home. Here in Northern New Jersey, Broker Opens are usually on Tuesdays and Thursdays.
Instead of waiting to see the house either at the public open house or a private showing over the weekend, jump at the chance to join your realtor at the Broker Open. To find out whether there is a Broker Open House, simply reach out to your realtor. You might need to take time out of your workday to attend, but it could be a golden opportunity. Perhaps you can see the house on a Tuesday and make your offer immediately. Remember to follow the advice of your trusted realtor and make the offer very competitive. The goal is to make the offer so attractive that the seller agrees to cancel the public open house scheduled for the weekend.
Be aware that “windows of opportunity” can open and close quickly. This is precisely what happened to one of my buyers who could not leave work to go to the Broker Open with me, nor could they travel an hour to come out later in the evening. In this scenario, the house was a new construction home that was beautifully staged. The house didn’t make it to the weekend. Another realtor brought her buyers to the Broker Open on a Tuesday. The buyers were able to “shut down” the public open house with an amazing offer. The seller accepted the offer and they were under contract by Friday afternoon. So what was the amazing offer? The buyer offered $150,000 above the list price of $1,350,000. And it was all cash.
Home Buying Tip #2:
* See the house on the first day of showings. If there is a Broker Open during the week, ask your realtor if you can attend. Move quickly to make an offer that can “shut down” the public open house.
Oftentimes, the first day of showings is the same day as the public open house on the weekend, which is typically scheduled for the afternoon. When this happens, I find out if it is possible to schedule a private showing immediately before the start of the open house. My buyers are almost always more comfortable seeing a home without other people in the house. It gives them the time they need to experience the house more peacefully in order to determine if it could be their next home.
The Timing of Making an Offer
Determining the most optimal time to submit an offer on a home for sale is not always a straight-forward decision. When the house is new to market, the listing agent may announce a specific day and time when all offers need to be submitted by. But what if there is no deadline? With the current softening in the real estate market, many home sellers are now requesting to review offers as they come in, rather than setting a specific offer deadline. What does this mean for home buyers?
Being the first one to submit a written offer may potentially pose a disadvantage. Why? In real estate, we refer to it as being “leveraged“. The first offer might be used to encourage other offers to come in. The seller may ask the listing agent to go back to the other realtors who showed the property to see if their buyers have any interest. And once it is known that there is an offer on the table, other buyers might decide to move forward with an offer. The other buyers, of course, do not know what the first offer is. In fact, it could be a low ball offer from a buyer hoping to get a bargain. However, there is a “window of opportunity” in being the first one to make an offer. Here’s how this can work to your advantage if you are a home buyer.
If you see a great house for sale that is new to market, you may want to “strike while the iron is hot“. Your ability to make a swift offer may be just what the seller is looking for. With rising mortgage interest rates, some home sellers are anxious about how buyers will respond and may want to lock into a good offer as soon as possible. This can be a golden opportunity for home buyers. The key is to present a winning offer. What makes for a winning offer? For some sellers, it might just be all about the price. One of my buyers who recently moved up from Florida to New Jersey was able to swoop in on the first day the home was listed and make a very attractive offer. The seller accepted my buyer’s offer and agreed to cancel the Sunday Open House.
Home Buyer Tip #3:
* If you are going to be first, make it a strong offer. Think like a seller. Put on a “seller hat” and ask yourself is your offer strong enough to motivate the seller to say “yes”.
There are other sellers, however, who are not all about the offer price. These sellers have very specific terms that are important to them. One example is a seller who needs a “seller contingency“. The most common seller contingency is when the seller needs to find a new home, either to purchase or rent. In this scenario, the seller is looking for an offer whereby the buyers agree to make their offer contingent on the seller finding a home. For a buyer who has flexibility in their own timing, this type of seller contingency might just be what gets them the house!
Another example where sellers are driven by more than just the highest offer price is when the sellers are looking to “rent back” the property after it is sold. Why would a seller want to do this? Sometimes a seller needs the proceeds of the sale of their current home in order to purchase their next home. In this scenario, the sale of the existing home might not line up exactly with the same day of the sale of the purchase of their new home. Therefore, it is very important to the sellers to have flexibility and extra time in their home. Another reason why some sellers may want to rent back their home after closing is to allow their children to finish out the school year. A home purchase that occurs in April, for example, might not work for the sellers if they have kids in school. For these sellers, they may want to rent back the house for a couple of months until their kids finish the school year.
Home Buyer Tip #4:
* The more information you can obtain about the order of the seller’s priorities, the more clarity you will have about structuring a winning offer. For some sellers, the buyer with the most favorable offer terms may be the best offer even though if might not be the highest priced offer.
The Role of Timing in Attorney Review
Once a written offer is accepted and signed by both buyer and seller, it is called a “fully executed contract“. Here in Northern New Jersey, the contract is then submitted to the seller and buyer attorneys, which is known as Attorney Review. How long is the Attorney Review period? That all depends. It can range from a single day to several days. For the buyer, however, this timing can be crucial and sometimes even “make or break” the offer in a competitive real estate market.
You see, during Attorney Review, other offers can be presented to the seller. This means your offer potentially can get cancelled in favor of a stronger offer. If a competing offer comes in during Attorney Review, the seller may choose to go back to your offer to see if you can match the new offer. On the other hand, the seller doesn’t have to come back to you at all. This happened to my buyer when we were in Attorney Review. Another offer came in and my buyer’s offer was immediately cancelled. When the new offer came in, we were not given the opportunity to improve our offer. Ultimately my buyer went on to find an even better property, however this serves as a caution to buyers to not drag out the Attorney Review process.
To lock in your accepted offer, buyers will want to conclude Attorney Review swiftly. Once Attorney Review is concluded, you will be Under Contract. (For more detail about this, please consult your real estate attorney as individual contracts vary from one to another.). During the home buying process in Northern New Jersey, I always make my buyers aware that other offers potentially can come in during Attorney Review. And when the home you are pursuing is highly sought after and attracting a lot of buyer interest, you will want to get in and out of Attorney Review as expeditiously as possible.
Buyer Tip #5:
* Not only do you want to get your offer accepted quickly, you will want to get out of Attorney Review swiftly so you can get your offer Under Contract. This will help “button up” your offer and reduce the possibility of other competing offers coming in during Attorney Review.
It’s All About Timing
Once you have identified the home of your dreams, the role that timing plays in making that a reality cannot be overemphasized. While you may be thinking that you have more time (e.g. scheduling a showing appointment, waiting for the public Open House, delaying making an offer, taking your time during Attorney Review, etc.), I encourage you to re-think your roadmap for buying a home. As emphasized above, real estate is all about “timing“. When you include this in your strategy, you are more likely to get your desired home in “no time“!
Let’s Move Forward
For greater insights as to how to successfully navigate the current housing market, reach out to me at 908-239-9261 or [email protected] Whether you are house hunting or selling in New Jersey or in another state, I can assist you. If appropriate, I can also collaborate with my Compass colleagues located in over 300 cities across the U.S.
Did you miss my article in August? Here is the link: Home Buyers are Asking, “Bye Bye Bidding Wars?” – Suzy Minken
My Bird’s-eye View
Timing is Everything in Real Estate – 5 Key Tips for Home Buyers
© 2022 Suzy Minken
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