Whoa! Things are crazy-busy in this real estate market! The past two weeks have given me many opportunities to work with both buyers and sellers and our listings have gotten lots of showings, lately. (I currently do not have any listings that are short sales nor foreclosures, so all of my listings are traditional sellers.)

With so much inventory on the market, traditional home sales are enjoying a boost of activity. Short sales and foreclosures are still very much a part of the picture, but buyers still want the convenience and “less strings” of a traditional sale.

As a buyer, you should keep in mind the level of activity and increased competition. If you find a property you really like, that information should be in the back of your mind as you draft your offer. Here are some other things to contemplate:

  • Representation — In Wisconsin, buyers have an opportunity to be represented by an agent, known as a Buyer’s Agent. There is a contract for this type of representation. Discuss this with the agent you are working with so that you know what is available. It’s best to have this conversation BEFORE you begin searching for homes. Ask which party the agent is representing in the transaction.
  • Strategy — Is there a lot of competition for this home? It’s ok to ask if there have been offers and showings, but it shouldn’t be the sole deciding factor that determines the strength of your offer.
  • Earnest money — Will you provide earnest money with your offer or after acceptance of your offer, and how much? Different markets have different expectations depending on price range. Ask your agent for guidance on this. There are some – albeit few – offers that don’t have earnest money at all.
  • Personal property — What items of personal property will be included in the sale? Do you want all of it? Do you want things that the seller didn’t mention would be included? It is common to see appliances left at the home but not all sellers want to leave them.
  • Pre-approval letter — This is almost a “must have” before you start looking at homes anymore but sometimes the process takes a different direction. If you are making an offer on a short sale or foreclosure home, you WILL need a letter of pre-approval before you make your offer. Other sellers are learning about this, and they want to see them, too – preferably at the submission of your offer. Ask your agent for direction on this topic.
  • Contingencies — Every offer has contingencies, and the most popular ones are for financing and inspection. However, what about other issues: zoning, rules and regulations, covenants and deed restrictions, surveys or maps, marking of lot boundaries, etc. Discuss your concerns with your agent before drafting your offer.
  • Closing costs — Many of the offers in my area will be financed through FHA or Rural Development. These programs are intended to help buyers who have less than 20% down to make their purchase. Consequently, these offers will often include a contingency for the seller to provide a credit at closing to cover some of the buyers’ closing costs and pre-paid expenses like appraisal, etc. Check with your lender before the offer is drafted so that you know if you will need a contingency for this in your offer.
  • Buyer’s use of the property — I always ask my buyers: “Will you use this property in the same way as the current owner is using it?” In other words, do you plan to purchase a single family home and then after closing run a business from your home? Do you plan to convert a duplex to a single family residence or vice versa? Do you plan to install a fence or shed or put up a new garage in place of an existing one? Your agent needs to know that so that contingencies can be put in place to check out those options. Sometimes people investigate these details prior to making an offer. Check the zoning of the property to be sure that it is in sync with how you will use the property.
  • Inspections and tests — Have any been done by the seller? In our market it is traditional for buyers to have a home inspection, but on a rural property they will also be doing a well and septic inspection, as well as water tests, at a minimum. Other types of tests can include lead based paint, radon, mold, or pest inspections. Ask your agent what is typical in your market. If one of the new occupants of the home has allergies, consider what contingencies you might need in your offer.

These are just some of the more common issues that I review with my buyers. Every offer is different: That’s one of the exciting things about working in real estate!  When possible, I recommend doing as much research as you can prior to making an offer, but don’t let indecision weigh you down and stop you from getting your dream home! Get as much information as you can in writing, from the source of the “decision:” In other words, if you want to put up a fence, get a copy of the covenants and deed restrictions (if any) and municipal ordinance, if applicable, to see if you can do what you want to do. Also note that detail is important: A subdivision may not allow a privacy fence, but they will allow a chain link fence.

A final word about contingencies: Contingencies, when agreed upon between the buyer and seller, give the buyer (or seller) the opportunity to do something or check on something and if it isn’t acceptable to them, this can be a reason why the offer may not go to closing (every situation is different and you may need legal advice). If you ask for a radon test and the seller approves that contingency in your offer, you don’t have to do the test: You can waive contingencies at your discretion but if I were your agent, I’d want to see that in writing to document that you changed your mind.