Long Island housing news just keeps getting better for home sellers. There aren’t enough properties to go around, and buyers are competing with ever-escalating bids.
“Long Island has continued to experience near record-low inventory and high demand, resulting in a high share of bidding wars,” says Jonathan J. Miller, president of Manhattan-based real estate appraisers and consultants Miller Samuel.
In the first quarter of 2018, Long Island inventory (excluding the Hamptons and North Fork) was 11,022, the second-lowest first-quarter total in 14 years, Miller says. Houses also are spending less time on the market. According to a report prepared for Douglas Elliman by Miller Samuel, the average number of days from the original listing date to the contract date was 84, or 15 days less than the first quarter of 2017.
In April, 23.3 percent of homes that sold on Long Island went for more than their list price, up from 17.9 percent a year earlier, says Rachel Musiker, senior communications manager for real estate website Redfin. “That’s the highest level on record for Long Island since Redfin began tracking this stat in 2010,” Musiker says.
Whether you’re a buyer or a seller, here are some tips to put you ahead.
Find a knowledgeable agent. He or she should know what’s available in the buyer’s range and whether a listing is priced right. Realty Masters North Shore broker Linda Lugo recommends hiring a buyer’s broker, who is legally bound to help buyers get the best price and terms, says Lugo, whose firm is based in Huntington.
Set your limit and look for houses priced a little less. Would-be homeowners often let their emotions take over, says Nick Verma, who buys, renovates and sells properties in Nassau and Suffolk counties and steps away from properties when the price goes too high.
Consider selling your old place ahead of time. Michael Tambone says his cash down payment and ability to close quickly helped his family come out ahead in bidding for their 100-year-old house in Northport village. Tambone, a marketing consultant, and his wife had sold their house in Long Beach and were renting in Northport when they found their dream home.
Make sure you have preapproval for a mortgage
If you're going to finance a purchase, have proof of preapproval. And be sure to know the right time to put in your offer. A savvy agent will know if the seller is accepting bids during a set window or on a rolling basis.
You may want to consider waiving financing and offer cash instead. "I'm a builder, so I offer cash right away," Verma says. "That's one key factor that I have over anybody else." Make sure you have proof of funds, such as a bank statement or letter from your bank confirming how much you have. "If the seller sees your offer with financing and sees a similar offer for cash, they're going to lean for the cash," Lugo says.
Make a personal appeal. For example, tell the seller how much you love the home or how you plan to raise your family there. “A truly successful transaction is one where the seller and the buyer are really happy that they did this with one another,” says Ted Gounelas, associate broker and manager of Coldwell Banker M&D Good Life in Patchogue.
Price it right … and then maybe a little higher. “With this market climate, I’m advising sellers to trust the market, at least for the very first two weeks, and if they have a slight fantasy price, even 5 or 6 percent more than what we think recently closed sales are, to attempt it,” Gounelas says. Alp Ozarslan listed his house in Hicksville for $459,000 and ended up accepting an offer for $475,000, closing last year. Ozarslan and his family were surprised about the bids, “but we were pleased about that little hike.”
Restrict showings to the open house. “You bring them into the one location within a two-hour time frame, and now the two serious buyers suddenly say, ‘Wait, I’ve got to take advantage of this before I lose out,’ ” Gounelas said.
Set a deadline for offers. With a hot listing, “the brokers are going to be tripping over each other to get into this house,” Lugo says. “Do I want to call my seller every five minutes with an offer? Or control it for them, and all the buyers know we’re going to open offers all at one time?”
Consider the merits of each offer. “Often, the one with the most cash is the one on top,” says Ozarslan’s agent, Raj Jaggi of Realty Connect. Other times, he adds, it might be the down payment or the time frame. For Ozarslan, the winning bid was the highest one, with no mortgage contingency. “He liked that family, too,” Jaggi says.
Be clear and play fair. “The legal side from my perspective as a seller is, you send out a contract that states the seller is not bound until they sign a contract, and I put that in the cover letter of a proposed contract and in the body of the contract so there’s not any misunderstanding,” says Tim Daly, a real estate attorney in Huntington. “Until it’s signed by the seller, it’s open for negotiation.” However, it’s OK to tell bidders the number to beat. “If there’s interested parties and they know about it,” Daly says, “they’re going to come up with their best offer sooner rather than later.”
If you’ve been looking for a house on Long Island, it’s likely you know the unique brand of agony that comes from watching the home of your dreams slip away to another buyer. If you’re a home seller, you may be overwhelmed trying to make sense of the offers and terms that are piling up.
But understanding the process can take away some of the anxiety. Here’s what to expect.
Possibility 1. The seller chooses the best offer from among the initial round of bids (perhaps the least nerve-racking for buyers).
Possibility 2. The seller’s agent will tell bidders there are several offers. The agent asks for each bidder to submit their highest and best offer by a certain date and time. The seller and the agent then review all the offers and pick the best.
Possibility 3. The seller and agent decide to negotiate with each potential buyer. The seller’s agent tells buyers that they have more than one offer and that they have received a higher or better offer. The seller and the buyers negotiate until the seller decides on the top offer.
Source: Jean Sheridan, Coldwell Banker Residential Brokerage