The strength of the real estate market is dominating headlines. Recent reports reveal that nearly 400 Manhattan homes priced at $4 million and over went into contract during the first 12 weeks of 2022, breaking the record-high benchmark set just last year. Low inventory, frenzied scheduling, and bidding wars at all price points have become a hallmark of today’s real estate market. 

To help buyers put their best financial foot forward, industry veteran and top producing agent Scott Harris of Brown Harris Stevens offers the following tips:

On your mark, get set, go!

To ensure that you are ready for action at the onset, have your down payment funds identified, know how long it might take to liquidate, and have your up-to-date financial statements at your fingertips. 

Scott and his team recently represented the seller of a prime listing that a buyer set their sights on. The buyer, however, had money tied up overseas and the timeframe for the government to approve the release of funds was over six weeks. The delay created an opening for another buyer to swoop in and win the deal. 

Don’t wait until the deadline. 

Scott is seeing very competitive bidding situations, and strong buyers are winning.  Your 2021 Federal and State Tax Returns will undoubtedly be required for financing and Board review as applicable – do not wait until April 18 to file. 

The team recently worked with a buyer who just moved from overseas and did not have a 2021 tax return. As a result, the buyer was on the losing end of three 3 bidding wars. The fourth time was a charm, Scott was able to call on a personal relationship with a member of the Board and appeal for special dispensation.  

With proper preparation, the higher bid does not always win. 

Rising interest rates are creating an even greater sense of urgency in an already frenetic market. A successful buyer will have a pre-approval in hand and a mortgage relationship just a phone call away. 

Case in point: Two buyers were vying for the team’s listing Downtown. One buyer had a preapproval, was outbid, and had to obtain a new preapproval. Simultaneously, a second buyer came in with an even higher bid.  Luckily, the first buyer demonstrated their financial qualifications, and the seller decided to stay with them. 

The clearer, the better. 

When communicating your offer, your agent will paint a picture of your financial standing with the seller’s agent. Make sure they have a clear understanding of your compensation package, stock options and bonus structure, as well as portfolio accounts and ancillary sources of income. 

Scott recently worked with a buyer with approximately $20 million in assets. The individual is retired, and income is derived by continually selling-off and buying new investments as part of their real estate investment portfolio. The activity can be confusing, and success is found in Scott’s ability to help the listing agent understand. 

Reputation matters. 

Your broker’s reputation can add or subtract from your bottom line. In a competitive market, you need to work with an agent that has strong relationships and an equally strong reputation within the brokerage community to avoid any overarching feeling of mistrust.

Although every bidding war will not be won, buyers find comfort in understanding why. In a recent competitive situation, Scott’s relationship with the listing agent allowed him to know that his buyer was the third highest offer and still lost by over $100,000! In another situation, his client won the bidding, and this was purely because of his relationship with the listing agent whom he happened to be working on another simultaneous deal with. Through those interactions, she knew that time was not being wasted and that the buyers were as qualified as they were serious about the property.   

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