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Buyer / Seller Information Market Updates

10 tips for Buyers to Compete in Today's Market

July 29, 2013

Author: Rainy Hake, Executive Vice President, Alain Pinel Realtors
It is no secret that the housing market in the Bay Area is competitive. With over a year of suppressed inventory and historically low interest rates, the past several months have shown no shortage of multiple offers and bidding wars. In the last month or two things have begun to slow down – we aren’t seeing as many 10-offer bidding wars, interest rates have crept up, and the number of transactions have slowed. It’s also true some buyers are being priced out due to rising prices, or are just discouraged by having written several offers with nothing to show for it.
While still-active buyers or buyers on the fence should be encouraged by this favorable news, it is important to stay grounded. “Less competitive” than what we saw earlier this year still is very competitive by most standards. If you’re looking to be a successful buyer in this market, here are 10 tips to help you:

  1. Have reasonable expectations. While we can give you great advice, there is no guaranteed formula for success in any market. Having an offer rejected is frustrating, but it is the reality of the market.
  2. Hire an agent. Not only do they guide you through the process and know the market, but they often hear of listings first – even if they haven’t hit the market yet (that includes Zillow and Trulia). This is invaluable when some homes aren’t staying on the market more than a few days.
  3. Don’t lowball your offer. The days of submitting an offer below asking price and thinking a seller will come back with a counter offer are over. If you aren’t putting your best foot forward, sellers will know – and will tell you no.
  4. Cash Cash Cash. The closer you can make your transaction to being “all cash” – the better. A transaction that is not dependent on a loan approval is more appealing for most sellers.
  5. Choose a reputable lender and leverage it. Sellers and their agents are often more comfortable with institutions that they’ve worked with before, have local offices, and have great reputations. Having a good relationship with your lender is also important. If they can write a compelling pre-approval letter, you’ll stand out. We have even seen lenders call the seller’s agent to personally assure the smoothness of a potential transaction.
  6. Write a simple, friendly offer. If  your offer is full of contingencies, special provisions, title fees, home warranties, and  timelines, there are more things that can potentially go sideways. Sellers want a smooth transaction.
  7. Increase your earnest money deposit. Nothing says you are serious about seeing a transaction through more than money. It expresses your confidence in the transaction and will increase the seller’s, as well.
  8. Write a letter to the seller. (starts the same as #7. Changing wording.)  “Gut feelings” about people do factor into real estate decisions, so make a positive impression. It may be important to the seller to know their home is going to someone who will value it as much as they do. Make a personal appeal with an emotional connection and you can truly stand out.
  9. Offer a quick close. Doesn’t everyone want this? If you’ve bought or sold a home before, you know how exciting it is when a sale finally closes. A rent-back never hurts either.
  10. In-person presentation of offer. The art of presenting an offer in-person  is key. If your agent is making a face-to-face presentation of your offer to the seller’s agent, it could help you stand out. Remember, a seller isn’t picking just a buyer to work with, but a buyer’s agent, as well.

For every buyer, the situation is different – which is why it is crucial to obtain professional legal, financial, and real estate advice. With the market starting to show more opportunities for buyers, partnering with an experienced brokerage and an assertive agent can be the key to taking advantage of them.

This article recently ran in the July 26th, 2013 Palo Alto Daily News publication Premier Homes.


About Author:

Rainy Hake currently serves as the Executive Vice President of Alain Pinel Realtors where she plays a role in managing the strategic direction of the company, and also oversees the Marketing, Technology, Training and Strategy departments. She has over 15 years of experience in the real estate industry and holds and MBA from the University of Oxford.
Buyer / Seller Information Market Updates

Pre-Approvals and Financing: Quality Matters

June 3, 2013

Author: Ron Gable, Vice President and Manager of Alain Pinel Realtors San Mateo and Half Moon Bay offices.
What a difference a market can make; buying a home today has, in many cases turned into an extremely competitive environment. Many properties are attracting multiple offers and selling for well over the asking price and this is changing how buyers need to think about pre-approvals. That is where a lender has reviewed the buyer’s credit and income/expense history in order to pre-determine their ability and amount of loan obtainable in order to buy. For years, REALTORS® have been advising their clients to obtain a pre-approval for a home loan prior to making an offer – and in this market, it is not so much about whether you have one, but the quality of the one you have.
In the past, there was a question of what to do first: shop for a property or look for financing? Traditionally, many homebuyers used to buy a home backwards. A typical scenario was that a buyer sees a property they want to purchase. They have their REALTOR® formulate an offer. When it is accepted the scramble starts. There would be a frantic rush to find a lender to work with in order to meet the loan contingency removal date. Thankfully for everyone, that process has changed for the better.
In today’s environment nearly 100% of offers come with a pre-approval letter or commitment so the seller can have a comfort level with the buyer’s financing requirements. In other words, the buyer has gotten the financing equation out of the way with the exception of an appraisal.
One thing inexperienced buyers don’t realize is how the quality of the loan pre-approval can affect the favorability of an offer. Which lender, their track record, and their reputation in the community can all affect how an offer is viewed. An out of state buyer who has a long-term relationship with a bank may not be looked at with comfort by a seller who has never heard of the bank and questions their ability to perform. So too with a web-based lender, one that has no physical location and whose communication process may be by email. In a market in which we are seeing many all cash offers, buyers requiring financing need to do everything possible to reassure a seller than their transaction will go smoothly to remain competitive.
When reviewing multiple offers, a key point that seller’s agents advise their clients is to look at who will be providing the financing. Many local lenders will call the seller’s agent prior to the offer being presented in order to introduce themselves and confirm the buyer’s ability to obtain financing. The purpose there is not to sell their buyer per se, but to add an additional level of confidence. Local lenders who are known to agents are often received in a favorable light, and the seller’s agent will have the ability to tell their client that they know of this lender. Often times that agent has done business with that lender and can offer an even stronger level of endorsement for that particular offer.
Today’s market is competitive – buyers are making all kinds of compromises to make themselves more appealing to sellers. Buyers are not only facing bidding wars and multiple offer situations, but in the Bay Area, buyers are up against all-cash offers. For the majority of home buyers who do require financing for their purchase, make sure you have a pre-approval from a reputable lender. To win in this market – the value of making financing as easy and comfortable for all parties cannot be overstated.
This article recently ran in the February 8th, 2013 Palo Alto Daily News publication Premier Homes.


About Author:

Ron Gable is a tenured leader in the real estate industry and serves as Vice President and Manager of Alain Pinel Realtors San Mateo and Half Moon Bay offices. With long-term family roots in real estate, Ron brings a highly qualified level of experience and performance to office management and guidance to sales professionals.