Ask James Dainard
Q&A With a Local Expert in Real Estate Investing
“I have recently listed a few properties and they each have multiple offers. How should I determine what is the best offer? In a few instances we have gone with the highest bidder and they end up backing out. – Margaret of Shoreline, WA
Especially in today’s market it is not uncommon to see an upwards of ten offers on one home. While many offers are great to have, it can be difficult to decide which one to accept. There are several factors I consider when navigating through offers. As a general rule of thumb I like to see a fair amount of earnest money. The typical earnest money deposit is around 2% of the purchase price; however, a buyer who offers more than 2% is generally more serious about the purchase. A financial commitment which gets deposited immediately or within a few days of acceptance shows true interest in the home. It is also important to take note of any sort of inspection contingency the buyer includes on the offer. A shortened inspection or no inspection can also be a key signifier of true interest. Price is always a factor, however, many times we find that buyers with the highest-priced offer do not always have the best terms. Buyers with all cash are going to be able to close significantly faster than buyers who need financing. All cash buyers can typically close within a week whereas buyers using financing may need approximately 40-45 days. In my opinion, the most attractive offer as a seller is an all-cash offer with earnest money and no inspection, title, or finance contingency. From there, multiple time frames and contingencies will play a large role in ranking offers. I suggest getting teamed up with a credible broker who can vet buyers over the phone to sense their interest level in the property.
“How do I select a realtor? What are key qualities I should look for?” – John of Issaquah, WA
If you ask anyone who owns a home or is purchasing a home, they most likely know a realtor. Does that mean that their realtor is the best realtor for you? Probably not. Just as you wouldn’t go to an optometrist for a sprained ankle, you shouldn’t go to a commercial real estate broker to sell your residential property. The realtor you select should specialize in the product you are seeking. A key quality that I look for in a realtor is someone who is geographically versed in the specific area that I am looking to purchase a property in. I also look for someone who is proficient in the product that I am looking for. There are all different types of real estate, a few different types are end user properties, luxury properties, and investment properties. Specific brokers will specialize in different locations and product types. Be wary of the broker that tells you they know it all.
“We have an investment property and it seems attractive to sell ourselves and save on commission. What are the advantages of working with an agent?”
–Anthony and Sophia of Cottage Lake, WA
Technically you can save on commission, but not in the way you may be thinking. There are some transactions that go smoothly and seamlessly and you may wonder what it was the realtor did to make it look so easy. The reality is that real estate is a tricky business with many caveats. I presume most of us carry car insurance and medical insurance, and we pay for these amenities that we sometimes never use. Hiring the right realtor is similar to having insurance for the most expensive asset you own. If something goes wrong, for instance, a contractual or legal issue, a realtor can help assess the situation. Additionally, in the current market and we are seeing a lot of multiple offer situations, and homes are selling for well-above asking price. I have noticed that when the home is sold by the owner, the owner has a higher tendency to accept the first offer they receive. A broker has first-hand knowledge of the market and has an idea of what they will be able to get for the property before it is even listed. A professional realtor will not be as likely to accept the first offer and may be able to get you $20,000 – $50,000 over your asking price depending on market conditions. Oftentimes the extra money your realtor is able to secure for your home is well beyond what you will pay them for commission. The only real disadvantage of hiring a realtor is hiring the wrong realtor.