What a Winning Property Contract Looks Like on Longboat Key
If you’re struggling to develop a successful offer on a Longboat Key residential property, you’re not alone. Welcome to the ‘seller’s market’. Seller's markets exist when there are a lot of buyers competing for a low inventory of active listings.
Currently, homes with all the bells and whistles – and those without - draw offers from more than one buyer. When this happens, the house often sells for more than the list price. It is important to understand the price isn’t everything to a seller. There are other factors. If you are trying to buy a home on Longboat Key, here is some advice to help you understand what it takes to beat out the competition for a winning property contract on Longboat Key.
- It’s crucial to do what you can to make arrangements that will allow you to look at properties as quickly as possible. Make sure all documents - including proof of funds - are ready to deliver if needed. A mere 4 hours can be the difference between winning and missing out on a residence.
- When you’re ready to buy, write your very best offer. You might get only one chance to make an impression on the seller, and 5% earnest money deposit is typical.
- Because sellers are looking for the most attractive offers, I advise writing your contract offer using the FAR/BAR Standard Contract, not the FAR/BAR ‘AS IS’ contract. There are several crucial differences between these two contract types. Neither contract is objectively better than the other. It all depends on the nature of the transaction and the type of property involved. In this competitive market, the Standard Contract is more desirable for sellers.
One significant difference relates to the Inspection Clause. In short, the “As Is” Contract gives buyers greater discretion in deciding whether to proceed with the purchase deadline and cancel the contract without penalty. In this highly competitive market, sellers are looking for the least amount of contingencies possible. They will choose a contract that has less wiggle room for withdrawal. You could also guarantee the seller you won’t ask for repairs from the home inspection if they accept your offer.
- In this fast-paced market, sellers are not accepting contracts with mortgage contingencies including appraisal requirements. So be prepared for an “all cash” closure. Any language that indicates your offer is dependent on receiving loan approval will be rejected. Buyers are getting creative, even enticing sellers with the invitation for a 2-week lease back of the property for up to 5 years.
- Many standard real estate purchase contracts give the buyer a set number of days to perform inspections. If inspections are not complete in that time frame the buyer is required to proceed with the transaction regardless. Shortening that period to the minimum needed to perform whatever inspections you feel necessary can help your offer stand out.
- Sellers usually prefer to close within 30 days or fewer. However, because of how fast properties are currently going under contract, some sellers may request a longer closing period in order to prepare for their move. Being flexible regarding a time frame that works for the seller, might give you the edge to beat the competition.
- Avoid making your offer contingent on things such as your current home selling or someone else in your family seeing the property as it won’t be accepted.
When it’s clear you are going into a multiple offer situation, adding the ‘escalation clause’ might make sense. An escalation clause states that the Buyer is willing to outbid any competing offer on the real property by an incremental amount, up to the maximum purchase price offered. I am seeing a wide variety of offer-review processes playing out on Longboat Key. Some might specify, for example, that the property is going on the market on Friday, and that all offers will be reviewed the following Thursday. The sellers and their Realtor will make a final decision that day. This situation can be ideal for the escalation clause when a buyer knows it's an all-or-nothing offer.
Other sellers take a back-and-forth approach. They may collect offers from buyers for one week. Then respond to a handful of the best offers by saying "Send us your highest and best offer." Before writing an offer, your Realtor needs to be aware of the details. In addition to making sure his client is best prepared for the situation. It is imperative for all parties involved in the offer process to fully understand the escalation clause. This needs to be understood before submitting or accepting the clause.
Finally, hire a good Realtor. The wrong Realtor with a lack of experience in this hot market could cost you that residence of your dreams. It is impossible for any home-buyer to be fully aware of everything that is going on in the Longboat Key market. With over 40 years of experience on the island, I offer exceptional knowledge of the local market, and my close relationships with colleagues and clients have proved to be beneficial in maintaining that ‘inside tract’ on what’s happening in real-time on Longboat Key. Call me and let’s talk about making your dream home a reality with a winning property contract on Longboat Key.