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:
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
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.