Siân Murphy Group

Buyer addendum updated 1/3/2023

For homebuyers in the Boulder/Denver area, the first part of 2023 looks to bring leveling prices and steadying interest rates, while inventory remains tight Those who are not priced out by the rising interest rates from the second half of 2022, find themselves with more bargaining and negotiating power This provided a significant opportunity for Buyer’s to negotiate on both price and terms, especially regarding inspection items. However, we have still seen some situations that are multiple offers and over asking.Today, we find ourselves in a market where the average days on market for a listing are significantly more than this time last year Interest rates have settled in between 6-7%, generally speaking. Overall, we still have tight inventory historically speaking, in most segments of the marketplace We have compiled the information below to supplement our conversation on process and best practices to provide the most cutting-edge strategies as they relate to our market.

Funds

If the Buyer plans to get a loan to fund the purchase, we must have a pre-approval letter from the lender prior to submitting any offers Also, any funds that the Buyer plans to use for the down payment should be liquid – easily accessible.

We highly recommend Buyer’s work with a local lender who is easily accessible and responsive We’ll need a lender letter (pre-approval letter) to accompany any offer we make Oftentimes, it’s necessary to request this from the lender on a weekend or at a time beyond regular business hours In addition, it’s useful to work with a local lender to run different offer scenarios, specific to the subject property. We also work on behalf of our Buyer’s, with the lender’s assistance, in the background, to produce the best-fit offer.

Acompetitive strategy when a Buyer is funding the purchase with a loan, is to make the offer appear as close to a cash offer as possible (the more waived contingencies the better).

We encourage our Buyer’s to ask their lender: “will you fully underwrite my loan PRIOR to going out home shopping?” – this will enable us to expedite closing, potentially waive the appraisal (depending on cash on hand), and potentially waive loan conditions contingencies This competitive strategy is more often utilized in a multiple-offer situation We are still seeing some listings with multiple offers, so we like to educate our buyers to this strategy, and implement, if necessary

If paying cash, we need proof of funds to accompany our offer.This can be a redacted bank statement or a letter from the Buyer’s financial institution

Showings

Overlapping showings are sometimes not allowed and appointments are then required We may only have 15 minutes in a home for a showing, and sometimes as much as an hour is allowed. If Matterport walkthrough and/or video is available, we highly suggest studying this prior to showing These are easily accessible from the listings we send you via email or on services such as Zillow.The more educated you are on a home prior to seeing it, the better.

The sooner we can schedule showings the better With some listings, due to the frenzied nature of scheduling, these slots can fill up quickly Please do not hesitate to send us properties of interest and we will do our best to accommodate a showing window that works with everyone’s schedule

We think it’s better to reserve a showing and cancel it later if we don’t need it, than to wait until the last minute to schedule a showing

That said, we highly recommend Buyer’s do a drive-by prior to our scheduled showing, if their schedule allows for it

Current market cadence

What do we mean by cadence? Our market, in most price ranges, has normalized, and isn’t the frenzied and hot seller’s market it was this time last year In any market, there is a certain schedule of events that can be typical. We want our Buyer’s to be aware of this schedule so they can plan accordingly

- Tuesday – Friday of week 1: properties are listed on the MLS (Multiple Listing Service)

- Thursday – Sunday of week 1: properties are open for showings, sometimes moved from “coming soon” status, to “active” status

- Monday week 2 –Tuesday week 2: if seller has received multiple offers, they typically review all offers during this period, choose their best-fit, and go under contract

- Wednesday week 2 – onward: if a listing stays on the market into the second week, and you are still interested in it, we will gather info from the listing agent on first week performance (# of showings, contacts, etc) + present to you our recommendations for next steps We may start to see price reductions as early as week 2

Seller’s schedules may vary so we ask our Buyer’s to use the above timetable as a general reference.

*If there is a new listing that is priced to sell and we believe there will be multiple offers in the first weekend, then the worst time to schedule a showing for that listing is Sunday afternoon –Tuesday morning We want to get you in to see this property earlier in the weekend, if possible

Writing an offer

In a multiple offer situation, securing a contract can be challenging We offer strategies to maximize our buyer’s chances of securing the contract

Every property is different, and we encourage our Buyer’s to consider that each home, on the market for less than one week, could receive multiple competing offers In addition, a final sales price of over list price, is not uncommon. If we suspect a multiple offer situation, we will always encourage our Buyer’s to put together their best offer first as most of the time there will not be time to reconsider, change offer price, or terms As the market has normalized and become more of a “buyers” market, there are many properties where we don’t recommend implementing this aggressive strategy

It is crucial that the Buyer put forward their walk-away offer price + terms, in multiple offer scenarios, so that if someone offers a slightly higher price and/or more attractive terms, our Buyer will be “ok” walking away

Strengthening the offer for multiple offer scenarios:

· Price – naturally the higher the better

Appraisal gap coverage – how much cash is the Buyer willing to bring to cover any deficiency between appraised value and offer price?

Inspection language – will the Buyer only be inspecting, and objecting to, major health/safety/hazard items? More aggressively, will the Buyer be writing a “pass/fail” inspection where the only recourse (at least on paper) to an unsatisfactory inspection is to terminate? There is some nuance to this that we can discuss o We always strongly encourage our Buyers to get a home inspection, regardless of how we might write our offer terms.

· Waived contingencies o If the Buyer will be covering the entire gap between appraised value and offer price, then we have the option to waive the appraisal contingency o Should the Buyer have a fully underwritten pre-approval letter and the consent of their lender, we may be able to waive the final loan contingency o When an offer is written “pass-fail” that means the Buyer will forgo their opportunity to object to the inspection and come to a resolution with the Seller (waiving inspection resolution and objection contingencies).

Earnest money

o Most aggressive: have earnest money go “hard” (belong to the seller) upon execution of the contract.

o Are there specific points in the contract where portions (or all) of the earnest money does go hard? (i.e.: after inspection, appraisal).

o Buyer might offer to double or triple the suggested amount ~1% of purchase price.

Number of days until closing o Quick closes, i.e. less than 30 days, oftentimes give a Buyer a competitive edge

· Post Closing OccupancyAgreement (PCOA) o Sellers sometimes want to close as quickly as possible, and then retain possession for as long as possible (if a financed loan, 60 days is the max) while shopping for their replacement home.The more flexibility the Buyer has regarding dates and deadlines, the better.

Seller’s closing costs

o Whoever selects the title company pays for the title insurance policy. If Seller selects, then the title insurance policy is the most expensive cost to the Seller. Buyer may offer to pay for this and all closing costs, something that is oftentimes split 50/50

Escalation Clause