We know how hard it can be to get a home offer accepted. We’ve been shopping for the better part of two years and the real estate market has been more aggressive than a cornered badger.
To be honest, when the pandemic started in early 2020 and the economy abruptly halted, I expected one outcome to be a buyer’s real estate market as a silver lining for us in an otherwise crappy year.
Like any other market prediction I might have made at that time, I was dead wrong. With fewer and fewer properties for sale being bid up by weary but ready buyers, it can be awfully difficult to come out on top.
Thankfully, after a handful of close calls and missed opportunities over the last 20 months, we finally landed a house with lakefront property that should work quite well as our latest “forever home.” This is the story of how we made it happen.
A Seller’s Market
We are, without question, seeing a seller’s market in 2021.
Inventory is down drastically, and the lack of homes on the market has shifted the supply and demand curve sharply to the demand side.
There are lots of buyers, not many sellers, and if you don’t take these facts into account when making an offer on a home, your odds of getting your offer accepted are as low as the inventory.
Anecdotally, I’ve heard from people who’ve made offers six figures over the asking price on fixer-uppers getting rejected. People are buying homes sight unseen, waiving many or all contingencies, and taking risks they never thought they’d have to take even one year ago.
This is happening throughout the country in both metro areas and rural locales. Some of the most expensive and largest metro areas like New York and San Francisco are an exception, as the work-from-home phenomenon has de-emphasized the importance of being right where the action is.
For the rest of us, and that includes people in 18-hour cities, college towns, resort areas, and hidden hamlets, it’s a true seller’s market. Again, I think the shift to more work-from-home jobs has people realizing they can work from anywhere, even from a recreational lake in northeast lower Michigan.
The inventory of homes varies seasonally, but there as of early 2021, there are only half as many homes available as there were in 2016. There are actually more real estate agents than there are homes for them to sell in the U.S.
This seller’s market has made our position as buyers challenging, but on the plus side, we’re about to become sellers on not one, but two properties.
We’ve got the lake cabin that we bought at auction for a song. It was a great second home close to my wife’s family when we were living further west, and it became our primary home when we moved back from Minnesota, but it’s not a great place to live year-round.
We also bought the $90,000 mid-century modern house in town as a place to keep most of our stuff and to touch down in between all the travels we had planned. It seemed like a great idea at the pre-pandemic time, but over the last year, we’ve realized that one larger home would make a lot more sense than the two small ones we own now that we’re more grounded.
Both will be offered up for sale in the coming months, and we’ve received interest in both even though we haven’t said anything about selling them. Buyers are everywhere, and they’re not shy!
As we’ve done twice in the past, we plan to sell by owner and list it ourselves. It’s not terribly difficult, especially with the assistance of a good title company. It also helps to have cooperative homebuyers who have reasonable expectations, which we’ve certainly had in the past.
Our Home Buying Journey
Before I retired from my final anesthesia gig in Minnesota, we put our Mississippi riverfront home up for sale with a DIY Zillow and Craigslist listing. It sold quickly and without hassle, and we closed on the sale in June of 2019, moving to our cabin in Michigan. I finished out my final workweeks at the hospital splitting time between a call room and my parents’ place half an hour away.
We toured a number of lake homes that summer, putting in two offers, getting one accepted. Numerous issues turned up on the inspection, and we chose to walk away.
We kept a close eye on the market even when we were out of the country in the winter of 2019 into 2020, clicking that Zillow icon in the bookmark bar daily if not several times a day. Not much came up.
In the spring, once COVID restrictions on listing and showing homes were lifted, a great place was listed. We called our agent and got a showing within 24 hours.
We didn’t yet know how aggressive this market would be, but we made an offer immediately after the showing at just above the seller’s asking price. All cash. We were ready to be done looking and move in.
We didn’t get the place.
Over the summer and fall of 2020, we made offers on three more places on the same lake, all of which had issues, but had the potential to be a very good fit for us. We didn’t get those, either.
We were determined not to let 2021 be a repeat of 2020 or 2019. We took a new, more aggressive approach.
How to Get Your Offer Accepted and Land Your Dream Home
I manage my own money because no one is going to care more about that money than me. Similarly, no one has a more vested interest in your home search than you. Don’t wait for a realtor to send you prospects. Be proactive and always be looking yourself.
Sites like Zillow, Realtor.com, Trulia, and Redfin are great places to see properties as soon as they’re listed on the multiple listing service (MLS). I primarily used Zillow and had parameters set up so that I would receive an email and a phone notification the moment a waterfront property was listed.
Don’t forget to look for homes that are for sale by owner. Yes, they ought to be listed on Zillow, too, but some sellers, particularly the less internet-savvy homeowners, might only use Craigslist, a local classified ad, a yard sign, or an FSBO website. Keep your eyes out for these; we bought one with a yard sign and Craigslist ad only when we moved to Minnesota.
Lose the Loyalty
While a realtor-free transaction can be pleasant and painless, and it saves the seller a lot of money, the fact is that most properties are still listed with real estate agents.
In 2019 and 2020, we worked with the same realtor that helped us buy and sell some nearby lakefront property that turned out not to suitable for what we had envisioned due to wetland issues.
When we sold that property, we made good money on the delta between our purchase and sales price, and the realtor earned both sides of the commission on the sale of those 7 acres when we bought and when we sold.
We really liked her as a person, and she acted as our buyers’ agent for showings throughout 2019 and 2020. We still do like her, but we realized that the lake we wanted to be on was maybe not her agency’s strongest market, and we decided it was in our best interest to start contacting selling agents directly.
A couple of things happened when we did this. One, we got more information about the home, the sellers, and their situations from the seller’s agent. Two, we met more realtors who said they’d let us know if they caught wind of a home meeting our criteria before it hit the open market.
Third, and most importantly, if the listing agent was comfortable writing our offer, they would be incentivized to get our offer accepted, as it would give them both sides of the commission. 6% beats 3% every time, and while the seller decides which offer to accept (or counteroffer), the agent can hold some sway.
Come with Cash
This is tough for many, and almost impossible in some markets, but if you can find a way to pay cash, your offer will stand out over those that require the buyer to go through the mortgage underwriting process and the uncertainty that can come with it.
How do you pay cash when you don’t have a swimming pool full of greenbacks in your backyard? You might have to be creative.
If you’ve got a large taxable brokerage account, you’ve got options. You could sell assets, doing your best to minimize the tax impact by selling stocks and funds you’ve held for over a year and those that have a high cost basis (i.e. a low percentage of gains).
You could also consider a margin loan against your holdings, which could give you access to hundreds of thousands of dollars if you’ve got sizable investments. Interactive Brokers and M1 Finance are known for offering very low-interest margin loans with rates in the 1% to 3% range depending on account size.
If the home you’re buying will be a second home, a home equity line of credit (HELOC) based on your primary home could be another source of cash. Be sure to have that.
Don’t Dwell On It
Timing can be very important, and making the first offer seems to carry more weight than it should with sellers, at least in our limited experience.
In an aggressive market, if you don’t make an offer within the first few days of the home being listed, someone elses’ offer may already have been accepted.
In the home that we just closed on, I called the listing agent 17 minutes after the listing was live on Zillow, which was late in the afternoon. We met him at the home at 7:45 a.m. the next day for a showing.
When he agreed to write our offer, we made a verbal offer on the spot for over the asking price, and formalized it later that morning with e-signatures. Ours was one of four offers in the first day or two, and we were given the option to make a best and final offer a few days later.
We went up about 4% from our initial offer, and it was accepted. I don’t know that we had the highest offer, but apparently, it was the best offer. Again, cash is king, and I believe we were the only offer not attached to a buyer’s agent and their ~3% take.
A Personal Touch
Most real estate transactions are rather impersonal. You might never meet the home seller, depending on how many realtors are involved and what their preference might be.
I get it. They don’t want anything to happen that might prevent a sale from closing, and buyers and sellers not getting along could be a stumbling block.
It’s very likely you won’t meet the seller(s) before you make an offer (unless the home is for sale by owner), but you will have the opportunity to make an impression. The last time we sold a home, the buyers wrote a lovely letter with drawings from their kids, and they talked about how the home would be perfect for their family.
We’ve chosen to do the same when we really want a place — and we shouldn’t be making offers if we don’t really want the place.
If the home is for sale by owner, you know who is selling it. If you’re working with a realtor, the written offer will have the seller’s name. Take a minute to look that person up with a quick Google search. You may discover something that you have in common. Anything that might give you a leg up on the competition would be good to include in your offer letter.
In our case, the seller on this home was an estate with a state-appointed trustee, so we figured this person may not have much of a personal stake in who gets the home. Still, I looked her up, and she looked like she could be a mother and possibly a grandmother, so the thought of a nice young family moving into the home might appeal to her.
When we closed, we were in the same room together (this doesn’t always happen) and we found out that she Googled us, too. “I read a really nice article on you guys in Forbes Magazine,” she told us. She had also met my wife years earlier when she worked with my wife’s aunt.
Those personal connections may not speak as loudly as dollar bills do, but they can easily be a tie-breaker when multiple offers are close in value.
Below is a slightly modified version of the letter we wrote most recently.
Dear Home Sellers,
For a couple of years now, we have been looking for the right place on the lake to call home. We have made numerous fair offers each of the last two summers but have had no luck thus far.
The property on Waterfront Avenue would be a great fit for us. We love the mid-century style of the house. Our current home and previous home before that were both built in the 1960s, as was most of the solid-wood furniture we’ve accumulated over the years.
Having acreage with the house and the future potential to build on the lakeshore is also a huge bonus. Our boys could use some room to roam, and this property has plenty of it!
I can see us making memories there for years to come.
We hope to hear good news soon!
Prospective Home Buyers
About Our New Home
That’s how we got the home. We were our own best advocate, we went directly to the seller’s agent, came prepared with cash, made a lightning-quick offer, and added a personal touch.
What kind of home did we get?
Like our last two homes, it was built right around 1960. It’s got solid bones and our mid-century modern furniture is perfect for a home built in this period.
We’ve been wanting to be on the lake, and this 3-bedroom, 2-bathroom home with a full semi-finished basement is across the road from a large recreational lake close to our newly adopted hometown in northern Michigan.
While across the road from the lake isn’t exactly what we were looking for, the house is on a total of 2.5 acres, 1 acre of which is directly on the lake — 3 smallish lots combined with a total of 140′ of lakefront that was once home to 4 rental cabins. The foundations of 2 of them still remain.
In the few days we’ve had the place, my wife has been stripping wallpaper like a woman possessed, and I’ve been tearing up carpet to uncover about 1,400 square feet of beautiful red oak hardwood flooring underneath the dated covering in the bedrooms, living room, hallway, and closets.
We plan to do some minor renovations, like painting where the wallpaper was and having the original hardwood refinished. The bathrooms and kitchen could use some updating, too, but they’re functional as is. We hope to move in over the next month or so.
Eventually, when the supply chain catches up and the cost of building materials isn’t through the roof, we would like to build on the waterfront acre. And then, we’ll be moving again. It will be interesting to see what kind of real estate market we’re in then!
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What tips do you have to get your home offer accepted? What has worked for you? What stories have you heard?