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Competing for your new home? Here's what you need to know

US home sales slump in February
Posted at 9:30 PM, Feb 27, 2020
and last updated 2020-02-28 00:38:20-05

If you're in the market for a home today, be ready for a bidding war. Realtors say you are not only competing with other families who want the home, but also investors and internet buyers who are able to throw cash down for that home.

"The market has got a really large shortage," said Sarinah Brooks with Bliss Realty and Investments.

"When the supply is low the demand is high because everybody is fighting for the home," she added.

Jeffrey Wood a realtor with the Jeff Wood Group said he had never seen anything like this.

"I've had my license for four years. This is the most competitive I have ever seen it," said Wood.

"Especially if you're trying to sell a house and it's below $300,000, and the house is in good condition, you're probably going to have the house sold within a week most likely," said Wood.

Brooks agreed homes at or under $300,000 were in big demand.

Tori Talkington and her boyfriend Phil experienced the competition first hand while shopping for their dream home.

"It was definitely harder than we thought it would be," said Talkingon.

The young east Valley couple looked at 18 homes in three months and made an offer on four.

"You get your hopes up when you find one you like, you put in the offer and you're excited the whole night, thinking what you're going to do with it, then you find out there's 15 other offers in and you're like oh my gosh. How're we ever going to get this home?" said Talkington.

So what can you do to win your dream home?

The first rule of thumb, realtors advised was to get pre-qualified before you start to look. As soon as you see something you like, be prepared to make an offer right away. Waiting could work against you in this market.

"Also, be straight with your offer. No lowball offer right now it just doesn't work. If you put in a lowball offer, you can almost count on not getting that house because there are multiple offers within a day or two of the home being on the market," said Brooks.

Several realtors advised clients to personalize themselves to the sellers of the home by writing letters or sending pictures with that letter. That is what Wood advised Tori and Phil to do.

"We wrote a letter to the owners, telling them about Phil and I," said Talkington.

She shared the letter with ABC15. In that letter Talkington tells the seller they fell in love with the home as soon as they saw it, and that they left the viewing in tears of "hopeful excitement", talking about their new lives in together in their new home. The couple also mentioned their 9-year-old rescue dog and included pictures of her in the letter.

It is a strategy that may not always work, but the fourth time was the charm for Tori and Phil.

For those of you looking for a new home, a new build is also an option.

"The thing is new builds right now, what I've noticed is they tend to be quite a bit more per square foot than buying a house that is even two or three years old," said Wood.

If you decide to go for a new build, keep in mind buyers get a warranty, and that new homes will cost you less in maintenance and upkeep at least for the first 10 years than an existing older home.

Many builders also have preferred lenders and offer incentives or money that can be thrown toward closing costs or upgrades in the home.

Other tips to increase your odds of winning your dream home include:

Offering more money upfront. If you are in a position to increase the earnest money amount you put towards the home by 10-20 percent that can go toward the closing costs or down payment later.

Learn what is important to the seller. Do they have to close by a certain date to move? If so, can you meet that obligation? Are they looking for a good family to take care of their former home? How can you make the seller's life easier?

Show proof of funds. You can include a letter from your bank or accountant certifying you have the funds or assets you are relying on to get that loan.

Have letters of reference or anything else you need to make an offer ready to go, so you can move in quickly when you do find the home you really want.

As for don’ts experts advise, no matter how much you want that home, do not ever decide to forego the home inspection or take the home "as is". It will be one of your biggest investments, that is not something you want to skimp out on.