The San Diego real estate market is hot, as in sizzling. Like many other areas, San Diego has more buyers shopping than homes available. This is leading to more and more homes getting multiple offers. From a sellers perspective, this is a nice problem. From a buyer’s perspective this is a terrible problem. My buyer clients have put in offers on many homes only to lose out to another buyer. So what can a buyer do to make the seller take a closer look at their offer.
- Offer Price: The closer a buyer comes to the asking price of the home the more a seller will take notice. Low ball offers just won’t get looked at so if you intend to low ball the seller, stop reading now. If you are serious about getting the home consider a full price offer. When I make this suggestion I am not talking about a full price offer on a home that is overpriced, but if the comparable homes in the area are selling for the asking price, then consider offering close to or at asking price. Home prices, while rising, are still a great bargain in many areas.
- Make Yourself a Real Person: Most sellers are looking at the same offer package from every prospective buyer. Same forms, same back-up documents even the same numbers. How about making yourself a person rather than pieces of paper. There are many ideas to make yourself a person to a seller. Write or have your agent write a letter introducing you and your family to the seller. Tell them a little about yourselves. Explain why you want this particular house. I had a client who wanted a certain house because the front porch reminded her of time she spent on a similar porch with her father. Another client wanted a home because it was in an area where she had raised her now adult sons and she had happy memories of the area. I know an agent whose clients had their children draw pictures of the family in the new house. Another agent wrote a great letter about her military family clients and how they wanted to build a great home for the husband to come home to from his overseas deployment. A house appeals to you for some reason, share that reason with the seller, it may be something they love about the house also. You can use this idea for just about any type of sale except a foreclosure, most banks could care less. The military family I mentioned was buying a home from a flipper and even the flipper was moved by the letter.
- Share Financial Information: The standard California Purchase Agreement has a contingency that the buyer show the seller the buyer has the money for their down payment and closing costs. Since you are going to show the information when you offer is accepted, why not disclose now. Include a copy of the bank statement or brokerage account that houses the money at the time you make your offer. Be sure to delete account numbers and social security numbers, but make sure you leave your name as the owner and the balance in the account. This type of disclosure shows a seller that you have the financial means to complete the transaction and makes the seller feel more comfortable about accepting your offer.
- Remove Contingencies In Advance: Again on the standard California Purchase Agreement there are a number of contingencies that give the buyer time to really scope out the house. These contingencies include things like inspections and loan approval. If you don’t need some or all of the contingencies remove them from the Agreement at the time you submit it. For example, if there is a contingency about your loan application, talk with your lender to see if that item can be taken care of before you submit the offer, then you can remove that contingency when you submit the offer. Again you are making the seller more comfortable that you aren’t going to back out a week or two into the transaction. Keep the ones that you must have, but remove what you can if you are comfortable doing so.
- Formal Back-Up Offer: Unfortunately many homes fall out of the purchase process for all kinds of reasons. If you really want a particular home, consider asking to be put into a back-up position in case something happens. If my client really wants a home, I speak to the listing agent about being a back-up offer. In one case it worked when the original buyer backed out, the agent called me first and my client got the home. In California we have a form that we can submit to the seller to formalize our back-up position, check to see if your area has something similar. Using this approach, the seller agrees to put you next in line so you have less chance of falling off the radar. Check with your agent to see what might be possible.
- Submit a Complete Offer Package: Most of your offer package is dependent on your agent, but you and your agent should be working as a team to get you a great home, so actually look over the contract/agreement you are signing for items that are left blank or seem to look wrong. If there is a space or line that isn’t filled in, ask about it. Make sure your name, the address of the property and other items are spelled correctly. I had a listing agent call me once and wanted to work with me because I had submitted the most complete offer package of the 9 he had received. The fact the pack was complete suggested to the other agent I knew what I was doing. Remember, your agent might be putting the paperwork together for you, but ultimately this is actually your package and you need to know what is going on.
- Include an Escalation Clause: Buyers ask me all the time to find out how much the seller will take for a home. I have to explain that the information would be confidential and a good listing agent won’t disclose actual numbers to me, but as we all know the purchase of a home is a negotiation. Sometimes my buyers would be willing to pay a little more for a home than their original offer. With us not knowing what other buyers are offering, and us being willing to pay a little more, an escalation clause might help. Many sellers are no longer bothering with counter offers, who wants to counter 10 offers? Instead the seller takes the best of the 10 offers and everyone else loses out. With an escalation clause a buyer can let a seller know that the buyer will pay more than any other offer. Now this clause shouldn’t be taken lightly, it can sometimes result in a bidding war and overpayments on a house, however if done properly it will let the seller know you are willing to pay a little more to get the house. What seller wouldn’t notice something like that? Again, be sure to discuss this fully with your agent so you can decide if this strategy works for you.
All of these ideas came out of recent discussions in my office about ways to help our clients in multiple offer situations. All them have been used in one form or another to help a buyer get a home they wanted. Be sure to talk with your agent about ideas to help you stand out.
If you are buying or selling a home in San Diego, I would love to talk with you about ideas to help.