1. HOMES ARE SELLING FAST

Well, first of all, you can expect that homes are going to be selling fast. And I know that because in 2021, they sold a lot faster than we expected.  

The first half of 2022, I expect really similar to 2021.

It's January, we've got a foot of snow on the ground, but we're still seeing a fast market. I have clients who call me to look at a house and unfortunately, that house has already sold. So when houses are selling as fast as they are, YOU need to be fast.

Normally when we meet, I'll ask you what you're looking for and I will set you up on property search alerts. So you'll get an email from me every day with all of the new listings. Well, a daily email might not be enough. So depending on your urgency and your situation, you might want to ask for immediate search results, which could also be a little annoying because if there are seven houses listed in one day, that's going to be seven emails that you get. With 17 houses... that's a lot of emails. So that's one way we can combat the speed of which houses are selling.

I can get them to you faster. In exchange, you might be a little annoyed with the number of emails that you're getting.

You will also want to be pretty quick about going to look at the house. Don't save something until the weekend. Let's go look at it now. So whether that's on your lunch hour or tonight, when you get off of work, NOW is when we need to look at it. 

2. SUPPLY IS LOW AND DEMAND IS HIGH

Another trend I think buyers are going to see in the real estate market in 2022, is that good Move-in ready houses in desirable neighborhoods are going to have multiple offers.

Supply is low and demand is high, which means for that three-bedroom, one and a half, two-bath, two-car garage house in Beaverdale or West Des Moines -- that's going to have a lot of people looking at it.

How can you compete in a multiple offer situation? 

YOU NEED TO BE PRE-APPROVED 

The reason you want to be pre-approved... well, there's a lot of reasons... but you'll want to have your pre-approval ready in the event you're competing in multiple offers. What if it's Friday at seven o'clock at night? And we go look at a house that was just listed today. And all the lenders are at home with their families. They're having dinner and drinks and they're not answering their phone. And now all of a sudden you want to make an offer, but you don't have a pre-approval letter and three other people do.

Well, the sellers aren't even going to look at your offer because they don't know if you can actually get a loan. So it's just best in the case of multiple offers (and many other reasons that I can give you on another video) to be pre-approved. Before you even go look at homes.

BE READY TO OFFER YOUR HIGHEST AND BEST OFFER

You should also be ready to offer your highest and best offer. When there are multiple offers, there's very little opportunity for negotiating the price down. And actually, you're going to be negotiating the opposite direction. Ten years ago, we may have gone in with a lowball offer, but today it feels a little bit more like a high-ball offer. The listing price is always a suggestion. So in a competitive market where inventory is low and demand is high, if they listed that house at a seems too good to be true price, well, it might have been strategy.

They might have strategically listed that house so low that they got lots and lots of offers to really boost their sell price up. Personally, I don't really love that as a strategy, but you never know when you're going to run into it as a buyer. When it comes time to write the offer, consider what your highest and best offer is going to be.

What is the highest price that you are willing to pay for that house? And what are the best terms. Terms being the closing date, how long you're going to take to do your home inspection? Are you going to have an appraisal or are you going to do an appraisal waiver? There's a lot of terms that we can talk about and get you a really good strategy that will hopefully make your offer stand out from the crowd.

USE AN ESCALATION CLAUSE

So let's say you're looking at a house that's priced at $250,000, and you're approved for $300,000, but you don't really want to spend $300,000 because this house is listed at $250,000. So maybe that makes you feel like you just don't want to overpay $50,000 on a $250,000 house.

And that's what I mean about the list price being a suggestion, because a house is only worth what someone is willing to pay.

So even though the seller wants $250,000, at least that's what we think based on their list price. What we know is what you're willing to pay for it. And if you're in a multiple offer situation and multiple people are willing to pay significantly more than $250,000, well, you didn't overpay for the house. You paid market value for the house.

So don't ever worry that you're overpaying for the house because that's where the appraisal is going to protect you in the long run.

So let's say the house is $250,000 and you don't want to pay $50,000 more, but you're okay paying $30,000 more. So you're willing to go up to $280,000, but you're not really sure that you need to go up. Like you're okay paying that, but you'd rather pay less.

This situation is perfect for an escalation clause. 

An escalation clause is exactly that: I will pay you $250,000, or I'll pay you a thousand dollars more than any competing offer (And yes, we're going to need proof of those competing offers) up to $280,000.

The up to makes it an escalation clause. It's sort of like an escalator. It goes up, it's escalating to your ceiling price.

Last year, we found that a thousand dollars for the escalation clause, it became a little average. Everybody offers a thousand dollars more than the competing offer. When you offer less than a thousand dollars than a competing offer, it gets to be not even really worth it for the seller.

So I wouldn't waste any time saying I'll pay you $500 more. I'll pay you $250 more. Cause nobody cares. A thousand dollars is where people start caring. But what we found last year is that that's almost not really enough. So you could say, I will pay you $2,000 more than a competing offer.

Money talks when it comes in a multiple offer situation, if you're willing to pay $2,000 more than a competing offer up to $280,000, that really might work in your favor. And you're only paying more than what somebody else was paying. So you might not ever actually have to pay your ceiling price. It could also work out that somebody offered a lot more than your ceiling price and your offer was never a contender anyway.

And in that case, I always tell you:   "Don't worry, because if somebody else was willing to pay more than you. Then it wasn't meant to be your house. We'll go find the right one for you."

CONSIDER HOW YOU CAN MAKE YOUR TERMS MORE FAVORABLE

Another thing you can do to make your offer more competitive in a multiple offer situation is you can consider the terms that you're giving. Most offers have terms that are pretty similar.

If you're doing conventional financing and you have 10% down, well, somebody who's putting 20% down, they're going to have a little bit of an edge over you, but it's not that much. So your financing terms are probably going to be pretty similar.

Most people are probably going to have it be contingent on appraisal. Depending on your situation and what cash you have, you could offer to pay more than the appraisal price in the event that the property doesn't appraise. We can talk about that one-on-one but that would be a term that you could include in your offer that might give you the advantage over another offer.

And if you have time to give - why not? Especially if it gives you an edge over the competition.

There's a lot of other ways that you can make your offer more attractive. And we'll talk about what would be the best strategy for you specifically when we get into the process of coming up with your offer strategy. Because if I went through every single idea in this video, I'd go on and on and on for days.

YOU MIGHT WANT TO LOOK OUTSIDE THE BOX

LOOK IN OTHER NEIGHBORHOODS OR AN UP COMING NEIGHBORHOOD.

Another thing for buyers to consider, if they're thinking about purchasing in 2022 is to look outside the box. Not think outside the box, but look outside the box.

And what I mean by that is if everybody is looking in the neighborhood in Beaverdale, for example, if everyone is looking for the three-bedroom, two-bath, two-car garage in Beaverdale, and you find that you're not able to get the house that you want because you're losing in multiple offer situations. Well, what if you went outside the box and you looked in other neighborhoods, maybe more up and coming neighborhoods? 

Maybe the south side or the east side, not every area in, you know, the east side kind of gets a bad rap. "Oh, I don't want to live on the east side". Well, the east side is actually pretty nice. And sometimes you can get a lot more house for your money. Now, of course, that's neighborhood-specific. And we would want to make sure that you got a good one, but that's looking outside the box because it's not Beaverdale, but it could be the exact same kind of house that you really want to live in. It just has a different street address and you can always drive to Beaverdale to visit.

LOOK AT CONDOS OR TOWNHOUSE 

And maybe you're looking for a single-family home, but for whatever reason, can't seem to find what you're looking for or can't win in multiple offer situations. What if you looked at condos or townhouses? What if a different style of home would help you achieve your goal of becoming a homeowner? And then that's an investment that you can turn around in a couple of years and make a little money on. 

LOOK AT UGLY HOUSE AND GIVE IT A FACELIFT

Another way to look outside the box would be to consider an ugly home. What if you found a house that is ugly but has good bones. What if you could give it a little facelift and all of a sudden the sweat equity that you just put into that house, giving it new paint and scrubbing it, or maybe install a new counter. Maybe you refinish the hardwood floors.

What if your facelift made that ugly home that no one else wanted into the exact home you wanted to purchase?? 

Then, in a couple of years, when you're ready to sell that and move on to greener pastures, maybe that's going to be really good for your investment portfolio because you bought low with an ugly house and you were able to sell it high because of your amazing facelift. Something to think about there.

Of course, it's January and who knows what's actually going to happen this year. These are just my predictions. You never know, I might release a video in March that announces everything has changed. But as of right now, these are my best tips of what a buyer purchasing a home in 2022 in the Des Moines, Iowa, area can expect.