When inventory is low and there is a lot of competition in the housing market, it is not uncommon for buyers to submit competing offers on a particular listing. However, when a bidding war ensues and you lose your dream home to another buyer who has outbid you on terms or price, your agent should consider writing a backup offer.
A backup offer is a secondary offer made on a home that is already under contract. If for some reason the first deal should fall through, you will then have the option of moving from the secondary contract position into the primary contract position. For a home that everyone wants, there may be several backup offers. By getting your offer in first, you could be first in line after the primary sale falls through. In the Birmingham market, primary contracts on homes fall through about 19% of the time.
Once a primary contract is accepted and signed, that does not always mean that the sale of the home will actually occur. There are many different reasons why the first buyer can potentially pull out of the deal. Here are a few common real estate contingencies that can cause contracts to fall apart:
1. Inspection contingencies - There is a period of time, usually 10 – 14 days, that a buyer will have to investigate the condition of a property. During this time, the buyer has the opportunity to do a home inspection, sewer or septic inspection, roof inspection, termite inspection and more. During any of these inspections, should issues arise that cannot be worked out between the seller and the buyer, the buyer can terminate the contract.
2. Financing contingency – Unless a buyer is paying cash for a home, all other offers will be contingent on financing. One way to get a leg up on your competition is to get pre-approved for your mortgage loan with a mortgage lender. Getting pre-approved is especially important in a tight market. If your agent hasn’t worked to help you find a local qualified mortgage lender who will help you get pre-approved for a loan before you begin looking at homes, find a new agent.
The loan process can be challenging. There can be a myriad of reasons why a home loan will be denied, so find that information out before you stumble upon your dream home. If you don’t have a great agent, and you didn’t get pre-approved, keep in mind that it will typically take 21 days to get loan approval. Also, please keep in mind that there are a few circumstances that can throw up a red flag to your loan officer and cause your home loan to get denied, so do not do the following. Do not apply for a mortgage loan and then go out and make a large purchase such as buying a new boat, or car. Also, don’t change jobs, and if you lose your job, you will have to wait until you are working again to purchase a home.
3. Appraisal contingency – When there is an appraisal contingency (an appraisal will be required by a lender) and the home appraises for less than the price that was offered, well now you have a problem. The bank will only finance up to the appraised value, so if the seller doesn’t agree to come down to the appraised value, or the buyer doesn’t agree to pay the difference in cash, the deal unravels and the contract is null and void.
4. Cold Feet – Maybe the buyers made a hasty decision when the made their offer and now that they have had time to think through the purchase, they realize that it isn’t the right property for them. Maybe they haven’t budgeted properly, and they figure out that don’t have the money to do the remodel they want to do, or maybe another property hits the market that they like better, so they back out of the contract and simply walk away from the deal.
When writing a backup offer, buyers should expect to show up with serious offers at near or above asking price, and ideally with a pre-approval letter from a mortgage lender. Writing backup offers is an important strategy to be aware of when looking for real estate in tight markets where competition is high.
The spring housing market is quickly approaching. If you are considering listing your home this spring, use these tips to get your home in tip-top shape.
Create a great first impression by making sure your lawn is immaculate. Mow the lawn, prune the bushes, weed the garden, plant flowers and place fresh pinestraw or mulch in the beds. Pressure wash exterior surfaces such as siding, stone patios, walls and walkways. Clean gutters, windows and screens. Make any known repairs to cracked windows or leaky roof.
Prepping the Interior:
Helping buyers envision themselves and their belongings in your home is a key component to successful real estate sales. Renting a storage unit so you can pack up knickknacks, photos, extra furniture and other personal items is often the best method we use to prepare your home for sale. Filled to the brim closets and drawers should also be cleaned out. Messy closets give the appearance that your home doesn't have enough storage space. Removing clutter and depersonalizing the space is important.
Wash all bedding including mattress covers, sheets, comforters and blankets. People don't realize that they sweat when they sleep. Walking into a home where you can smell dirty bedding is an immediate turnoff and makes potential buyers want to exit a room as quickly as they entered.
Paint your walls a neutral color that will appeal to a wide range of buyers. This neutral palette will not only open up the space and make rooms appear larger, but it will also help potential buyers envision their furniture and belongings in the home.
Make every surface shine. From banisters baseboards and floors to ceiling fans and draperies. Clean your home until it sparkles!
Eliminate bad odors. Odors are extremely offensive to people. When showing the home, fill it with inviting natural smells by putting out fresh flowers and baking a batch of cookies. Strongly scented candles, air fresheners and sprays can be just as offensive as smoke and litter box smells, so don't just cover one smell with another. Remove the source of the smell and neutralize the residual odor.
When looking around online for information about refurbishing our metal casement windows and restoring functionality to our old 1920's era Rolscreen's®, I came across a message board with the following information.
The Rolscreen® has been around since the early 1900's. In 1925 Pete and Lucille Kuyper invested some money in a small Des Moines, Iowa company named Rolscreen®. In 1926 they moved the company back home to Pella Iowa. They introduced a Venetian blind a few years later and their first window in 1937. They kept the window and door products seperate from Rolscreen® and started the building of their empire. Not only did they have the Rolscreen® but they also introduced the pivoting double hung window to the world for inside cleaning, as well as the first aluminum clad window. It wasn't until around 1994 that they turned Rolscreen® into The Pella Corporation. This tied all their products together in one big knot.
The early Rolscreen® is just like a roll-up shade. It has an access cover and comes out to be serviced. Early (1925-1940) Pella Rolscreen® repair is next to impossible. Metal casement windows have the screen rollup cartridge secured by the wooden side casing pieces. The screen tracks are also attached to these wood casing pieces.
To remove the cartridge for screen replacement, I screwed in eye bolts to pry it out with. If you can find the finish nails, pound them on through with a nail set) the wood casing pieces with the tracks attached and the cartridge will be able to be pried down. Once the cartridge is out you have a very strong spot welded together metal box (about 2"1/2 x 2"1/2 x width of the window). Steel dowels through the center spring loaded roll axel can be undone in preparation for chiseling select spot welds. Once the axel and steel cylinder are removed you can start the process of removing the old screen. The copper screen will be secured to the cylinder with large lead solder areas. I used a leaded window soldering pencil (140w) to do this. A soldering gun or pencil used for electronics will not work.
Next, reassembly with new copper screen can begin. Use new copper screen with at least one factory edge for one side. When soldering the new screen make sure you are straight. The other cut edge can be double over and the large staples that will be applied down the length to keep the screen in the track can be applied. Don't overlap more than 1/4". The winding of the spring and reloading the cartridge is straightforward. The cartridge case can be pop riveted back together. The bottom rail that attaches to the screen that you pull down on is impossible to dismantle. I sandwiched the new screen between the pull-down rail and some 1/8 bar stock pop riveted together.
I ran across an issue this week when showing a home. The house was a beautiful late 1920's bungalow with a wrap around porch in a very desirable neighborhood in Birmingham. There was one problem though, the home had been smoked in for almost 20 years. This begged the question, can smoke stains and smells ever be completely removed from a home? After doing hours of research, the answer is, YES!
If you purchase a house that has been smoked in, this is how you begin the cleanup process. First, put on a mask or respirator and remove all fabrics including carpets, upholstery and fabric window treatments from the home. You would also need to remove any blinds and shutters from the windows. My personal opinion is that I would throw the blinds away. The shutters may be cleaned and possibly salvaged, but I would definitely consider starting over with all new window coverings.
Next, it is time to tackle the painted surfaces. After doing a quick search of the web for removing nicotine stains and smells from walls and ceilings, it looks like there are several methods that involve cleaning the walls and ceilings with a homemade or store bought cleaning solution. Do your own due diligence here, but it appears you can accomplish this initial cleaning with a vinegar and water or ammonia and water solution. I also read about a product called "Odorcide Cigarette Smoke", which works through a process of counteraction and absorption. I would probably use vinegar and water initially, and then switch to the odorcide. Yes, it is a lot of work to clean these surfaces twice, but worth all of the hours you spend in the long run. You don't want any carcinogens left behind to bleed through your paint. After all surfaces are good and dry, the next step is to paint the walls with an odor killing primer. Zinsser makes one that gets good reviews, but I read about a few other brands as well. After priming the walls, you can then paint with two coats of latex paint. Wood stained surfaces, such as doors and trim can also be wiped down with warm vinegar and water solution and odorcide.
Now would be the time to have a duct cleaning company come in and clean out all of the air ducts. They will walk through the house dragging a large suction tube, so this definitely needs to be done before you refinish your hardwood floors (yes, hardwood floors must be refinished). I would also get an HVAC company in to clean the furnace. You should purchase the proper size filters for all of your units and have these on hand so they can replace the filters for you as well. You should also get a chimney sweep in to check and clean your chimneys at this time.
Next, you should get a professional to steam clean all of the tile surfaces in the kitchen and baths and anyplace else in the house that may have tile. I have had Sanitary Rug Cleaners in Birmingham do this for me in the past. They charge $99 for first 150 SF and .66 cents per SF after that. Check out their website because sometimes they have a coupon. We used SRC to clean our terra cotta tile floors and they did a great job.
A word about terra cotta. Steaming terra cotta floors will take the finish off. Steaming any tile floors may take the top coat off of them, so talk to the professionals about this before you do it. We had to go back and reseal our floors, but it was something that we intended to do anyway, so we were fine with the steam cleaning process removing some of the topcoat. We re-sealed them ourselves using a Behr wet look sealer and they look great!
Harwood floors must be sanded down and refinished. Seal off your newly cleaned air vents and turn your systems off. I am including pricing here for you so you can run the math on hardwood floor refinishing. My hardwood flooring contractor charges $2.25 per SF, with a 400 SF minimum. Other contractors will charge more. I don't know of any who charges less. If you would like the name of my Birmingham area hardwood flooring contractor, please send me an email.
After cleaning, painting and refinishing all of these systems and surfaces, you should be able to live in a house that was previously smoked in without any residual problems, and enjoy that home for years to come.
**All price quotes are from March of 2018