In some areas of La Plata County, there is a severe shortage of inventory involving certain home types and price ranges.
Buyers looking for a home with one or more of these characteristics may be faced with a multiple-offer situation or they may have to consider submitting a back-up offer.
Negotiating the successful purchase of a home in high demand requires a very different strategy than buying a home that falls into a normal-demand category.
The greatest shortage of homes is within the Durango city limits. As you move away from Durango, there are generally more homes available.
In La Plata County, the highest demand is for stick-built wooden homes. There is less demand for manufactured homes, townhomes and condos. Affordable homes are very much in high demand locally. So, if you are looking for a stick-built home in the Durango city limits that is priced under $400,000, you will be negotiating a purchase in a very competitive environment.
If that is the case, the most important thing for a potential buyer to do is to quickly look at new listings. Secondly, you need to determine if the home is suitable for you in a very short period of time. Lastly, you need to promptly submit an attractive offer with a price at the high end of the value range for the home.
By acting quickly, you may be able to secure a contract before other buyers can act.
A multiple-offer situation happens when more than one offer is being considered by a seller. It is like playing poker – you do not know if you have the best hand (or the best price/terms) or the weakest among the players.
Typically, the seller will ask all interested buyers to submit their best-and-final offer. Once the seller receives the responses, the seller picks the best contract and buyer. The seller usually bases a decision on price. However, the financial strength of the buyer also may be considered.
So, what do you do if another buyer secures the contract on the home you want?
The seller may negotiate a back-up contract with you that would come into force if the initial buyer terminates the contract. It’s a good idea to include a clause that allows you to withdraw your back-up offer at any time. That will allow you to make an offer on another home while you’re waiting to see if your back-up offer will be accepted on the first home.
Generally, about 25 to 35 percent of contracts do not close, so there is a 65 to 75 percent chance your back-up offer will not become the primary contract.
The best way to avoid a multiple or back-up offer situation is to look at new listings and make a strong offer quickly on any home you like that falls into one of the high-demand categories.
Steve Setka is an exclusive buyer’s agent with Keller Williams Realty in Durango and a licensed mortgage originator. He can be reached at 903-7782 or firstname.lastname@example.org.