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Buyer Top Tips on Dealing with Multiple-Offer Competition

Buyer Tips on Multiple offersHere in Sonoma County, California the real estate market is dealing with Homes attracting Multiple Offers from Buyers.  Here are Buyer techniques you might wish to try to standout from the other offers.

My last column addressed recommendations and a method of dealing with multiple offers from the homeowner’s perspective. Many of the buyers we are currently assisting asked, “Hey, what about us?” The big difference between the Seller and Buyer is the SELLER will reach their goals in quick order. Buyers, however, may be making an offer on their 5th property and getting a trifle disgusted with the process. Let us explore those strategies and tips we use with Buyers.

In my last column we discussed HOW to deal with multiple-offers are happening across the price spectrum but more importantly in the “hot” price points associated with various areas in the county. Any of the “entry-level” price points are STILL facing tight inventory with big demand. Many Realtors are advising Sellers to place the property on the market, have a general “Open House”, a “Broker’s Open House” and then set a date in the near future to “review all offers”. This is usually done 7 to 10 days AFTER a property hits the market. The question is how a BUYER submits an offer which will not only secure the HOME but stand-out and appeal to the Seller.

Some buyers do NOT want to get “into a bidding war”. If you are in entry level pricing for the area you desire then you may wish to just hang-out for a few months. Perhaps the market may abate or cool-off. But for now–multiple-offers and “Bidding Skirmishes” are dominant rather than previous full blown WAR.

Tips for a great offer: first check the comparable sales. And only go back two months as the market can change THAT quickly. See how many houses sold for OVER asking price. How much over? A recent competitive market analysis for a client showed offers coming in at $10,000 to $30,000 over asking price on houses in his neighborhood. Next is to look closely at the “sold” photos—did they have a kitchen upgrade? New hardwood floors and carpeting? Landscaping refreshed? Or was it a run-down short-sale which sold at a discount? You can then start formulating your offer based on the condition of the home you desire.

Also your Realtor will check to see WHEN offers are to be reviewed on the Home you want. It could be the listing Realtor wishes to “present them as they come”. If this is the case then GET in there quickly and be first in line.  We tell buyers in super competitive price points to “Think it over in escrow”.  What we mean is your “Due diligence” timeline for inspections and having your questions answered takes place ONCE the offer is accepted. ON a California Assoc. of Realtors (CAR) contract the timeline for these defaults to 17 days.  You may have questions about permit issues, zoning regulations, septic system or well performance. DO THIS IN ESCROW once the property has been tied up. Conversely, before writing your offer you COULD go to the county of Sonoma, make some cursory investigations as to permits pulled and completed, age of septic or well. Maybe you want to call Week’s well and Drilling to ask about the water table, consult with a contractor, etc. If you do this BEFORE you write an offer you’ll LOSE the home as another savvy Realtor will get in there BEFORE knowing his clients are best served using the contractual inspection period. This is why we advise buyers who want to “think-it-over” to do so AFTER they’ve got an accepted offer on the Home. Remember, you can disapprove the house and contract within the contractual timelines if your questions are NOT answered to your satisfaction.

However, caution should be given to the strategy of securing a home with an inflated sky-high price only to back out two days later for no apparent reason! And WHATEVER you do only make ONE offer at a time on a Home. Remember, making three offers on homes with the intention of only buying ONE can constitute “fraud” as you are NOT bargaining in good faith. Plus it REALLY ticks off the listing agents!

What other tips? This may sound a bit hokey but just do it–submit a photo of you, your spouse and the kids along with your offer. I did these years ago and the sellers and their agent TOLD me it was “hokey”. We were negotiating on giving my buyers a credit of $5,000 so they could use an FHA loan. The wife looked at my buyer’s family photo, smiled a bit and said, “You know dear, this girl looks like our granddaughter Becky,” We got the credit! The photo should be accompanied by a letter describing why the WHOLE family wishes to live in the Seller’s house. Validate the reason WHY the Seller loves their home—great schools, parks, commute, floor plan, landscaping, etc. I even have heard of Buyers having their kids bake cakes or cookies by little “Susie” with a letter from Susie, in her OWN handwriting, why SHE wants to live in their home. Hokey? You’ll thank me later.

Also, having a rock-solid PRE-APPROVED, NOT pre-qualified, letter from a reputable lender is an absolute MUST. The language should state the loan approval is ONLY subject to “a preliminary title report, contract and appraisal”. Everything else should be DONE—proof of work, funds to close, etc. ENCOURAGE the Sellers and their agent to CALL your lender for confirmation. Also, having “proof of funds” for your deposit and down payment is another absolute when presenting to Seller(s) and their agent. By this I mean either a bank statement (account information redacted) or a solid letter from the bank stating funds are available. But I believe in “SHOW ME THE MONEY” so use an account statement which ILLUSTRATES the money available.

My next column will explore MORE “Buyer’s Strategies” when dealing with a tight, inventory marketplace and multiple-offers. How do you handle a “highest and best” counter offer? Should you shorten your timelines for inspections, appraisal, etc? Join me next time for more tips and tricks from the real estate trenches.

 

 

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