How to Buy Houses Few People are Looking At
Hey all, Zach McDonald, your real estate agent with Real Property Associates, and today I’m going to share how you can buy houses that few people are looking at.
Some of you may have heard about off-market opportunities. That’s a real old school way for agents to position themselves as a valuable asset. I’m going to give you on and off market opportunities, and to be honest, there are very few off market opportunities. Yes, there are some, and if you followed this channel for a while, you would’ve seen videos where I talk about that and how we can bring those to clients. But the majority of homes are going to list and the off-market opportunities are few and far between. With that being said, I think there’s a very obvious and also often overlooked way that buyers can essentially get themselves an off market opportunity without the house being off market. And let me explain contingent purchases, a house that is under contract but contingent on another buyer’s sale is technically still on the market, but it’s not advertised or marketed the same way.
So what happens is if you are a seller and you’ve had your house on the market for three, four, or five weeks, maybe you’ve done a price reduction, it’s been sitting for a little bit, you might be open to a buyer who’s not less qualified, but maybe less able to make the purchase. And what that could mean is maybe the buyer has another property or a mortgage and they’re not either able to make a purchase without selling the other house, or maybe they just don’t want to. But either way, that gives that buyer an opportunity to list their house and sell their house before the purchase closes. Now, a few reasons that’s not extremely ideal is, number one, you have this uncertainty as a seller. You don’t know if that house is going to sell. You don’t know if that buyer’s going to be reasonable with their listing price.
Now, these are things you can figure out and I always work for as an agent, but at the same time, there’s this uncertainty. It’s kind of like having an inspection contingency where you don’t know how the buyer’ss going to respond after doing their inspection or even if their financing’s going to come through. Sometimes there are issues that pop up with the financing that either were undetectable or weren’t detected at the beginning. So there’s just this heightened level of doubt whether the transaction’s going to move forward. Now, the doubt decreases as we move along in the process of the sale of that other house, and there’s more surety of the sale. Now, the second negative for a seller is what I would just say is opportunity cost. What if the house was still active on the market and more buyers were looking at it? What if a buyer would’ve come along in a day or two that was not contingent on the sale of their house and they would’ve moved forward with an offer?
Now, buyers still do see contingent homes, but they’re not marketed in the same way. It’s almost in this weird status where it’s not active, but it’s not pending. So it’s still available, but there’s already a contract and there’s lots of hoops to jump through, or at least it seems like that. So buyers are not as excited about those, and some agents really don’t want to show those houses because the chance of success is a lot lower than a house that’s active on the market. I would say a third, and at least final for this video negative for sellers is that there’s a delayed closing date. And at the beginning, it’s uncertain. You don’t even know when the house is going to close. So if you’re selling your house and you want it to happen fast, well, this is not really your option, but at the same time, if it’s where you find yourself, you’re waiting for the buyer’s house to be under contract, and then at that point, whatever the closing date of that sale is, yours would happen a few days after that.
And I mean, it could take 2, 3, 4 weeks for that house to get under contract, and then you might have another month. You might find yourself in a two to three month window where you are waiting for the closing of your sale. It could happen a lot faster. The house could be under contract in a week, closing in two weeks or three weeks, and all of a sudden it closes in about the same amount of time, 30 ish days that a normal sale would happen. But that’s not a guarantee, especially when the market is not as hot as it has been. So for a seller, again, those are just not ideal situations to be in. But if you’re under contract contingent, you’re still excited. There’s hope. As a buyer though, you have an opportunity if you are not contingent, if you don’t need to sell your house before buying the next one because you have an advantage, you can sneak in number one where there’s less competition.
So when you’re buying a contingent property or making an offer on a contingent property, there aren’t a lot of other buyers looking at it. Maybe one, maybe two over a two or three weeks. I mean, we’re talking about, nobody goes to look at these anymore, but you can make an offer on a contingent property and essentially bump the other buyer out. Now that buyer has an opportunity to either waive that contingency, which they usually don’t unless they don’t really need it because it puts their earnest money or good faith deposit at risk. The other option would be the buyer can accept an offer really quickly, but again, they can’t always control that. So you as a buyer that’s not contingent, can slide in with an offer. Now, another benefit here is that the seller’s insecure, we’ve talked about this, sellers are much more likely to accept your non-contingent offer versus maybe being a backup offer in a situation where they already have a solid one.
So some buyers might slide in and make an offer that’s a backup offer to a non-contingent offer, and they’re very unlikely to accept that. So that’s not a great option, but again, it’s an and option. But in this case, the seller has a little bit more doubt whether this contingent purchase is going to close. And so because they have the ability to accept your offer and they also have the insecurity, they’re more likely to do so. Number three, some of these buyers are incapable of making the purchase without this sale first. And if they’re put under pressure and they have, let’s say they have five days, which is the standard allowed amount of time to get their house under contract after your offer is made or waive the contingency, if they’re put in that type of situation and are either unable to perform or don’t want to in that case, then if they don’t remove that contingency, all of a sudden your offer is the number one offer.
So again, there’s opportunity here for you as a buyer to number one, look at houses that are on the market and you get to see the photos and you get to go look at ’em, but they have a lot less people looking at ’em, right? That’s a great opportunity. And you get to swim in a pool where there’s less competition, insecure sellers, and you get to position yourself as the hero essentially of the story. Are there opportunities that people are overlooking even in a more competitive housing market? Most certainly. And as things have slowed down a little bit here in the Seattle area, there are even more of these contingent opportunities. Even right now, as I record this video, there were 56 houses that were listed as contingent right now in King, in Snohomish County, and all of those houses theoretically are opportunities for a buyer to take a look at ’em and make an offer if they’re not contingent on a home sale. So if you have questions about this, feel free to reach out to me directly or we can chat in the comments. I hope that this video brought some value to you, so please give it a thumbs up and or subscribe to the channel.