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By Tara-Nicholle Nelson | Broker in San Francisco, CA

Buyers: 4 Secret Ways to Beat Other Offers

To every thing, the songwriter says, there is a season. (Turn, turn, turn.) This Spring, the real estate market in many places seems to be thawing out of an extended winter straight into a hot market of buyer activity. The upshot for sellers is great: shorter times on the market, more certain sales and higher sale prices.

But for buyers, there’s a somewhat scary new implication of this season change: multiple offers.

Upon learning that a home you’re trying to buy gets more than one offer, it’s instinctive to have one of a few kneejerk reactions:
  • fail to take the situation seriously and go in low
  • blindly throw money at the sellers (never a good move), or 
  • panic/flail your arms/cry.

None of these reactions, however, will get you the result you want: the house.

Making a victorious offer is more art than science. Sellers may be fixated on their bottom lines (sensibly so, if you ask me) but there are a number of other seller priorities that buyers can address in optimizing their offers. Here are some less-obvious strategies for besting the other wanna-be buyers who are vying for ‘your’ home:

1.  Offer more than asking (if the market data justifies it). It’s entirely possible that you’re shaking your fist right now, yelling something like: “You said these were ‘secret’ strategies!” Allow me to explain: offering more money *seems* like a super obvious way to beat out other offers, but you would be amazed at how many bargain-seeking, recession-trained and novice buyers simply don’t do it. Many think they’re scoring a deal by making low offers, even in the face of competition. 

This ignores two essential truths of home buying:

Essential Home Buying Truth #1: A bargain price does not a deal make, if you don’t get the home.

Essential Home Buying Truth #2: If you lose out on five homes before the market educates you to get ‘unstuck’ from your rigid, lowball offer strategy, you might end up facing even more competition for fewer homes a few months down the road - and end up spending even more to finally score a property. 

Also note that my advice here is to (after consulting the recent sales data and talking with your agent and your mortgage broker, of course) offer more than the list price - not just more than your earlier plan. See, when they get wind that there’s going to be competition, some buyers simply tweak the price they offer relative to what they had planned to offer before they received that information. Since we’re still at a relatively early spot this market recovery/multiple offer phase, lots of buyers are making this mistake of offering something more than they would have a few months back, but still less than the asking price. As such, you may be able to best other
offers by just going in with an offer just a touch over asking.

Talk with your agent about this - and involve your mortgage pro and financial advisor up front to ensure you don't overextend yourself. In more recession-proof areas, you may need to go so far over asking that you'll need to adjust your house hunt price range lower to be able to compete. And, of course, the recent sales data and your personal budget must all justify whatever amount you offer; otherwise, you’re just cruising for a bruising down the road when it comes time to have the place appraised - or make the monthly payments.

Accordingly, it behooves you to watch and work through the comparable sales data very closely with your agent, including the current trends in prices - if they are on the rise, you might need to offer even more than the house next door just sold for to “win.”  You can look to the current list-price to sale-price ratios to see just how far over asking winning offers are going, on average.

If you find the mere thought of offering more than the list price exasperating, keep things in perspective. Know that smart sellers are being very strategic and assertive, listing low to create an auction atmosphere and churn up multiple offers (something we’ll discuss at length next week, in Part 2 of this series). Don’t be duped into thinking you can get away with a low offer because the asking price seems like such a bargain. (And by the same token, don’t throw money at a place that is overpriced compared with the rest of the market.) 

Some of these seemingly lower-priced homes are getting 20, 30, even 50 offers in some areas (no joke!). The victorious buyers are those who are offering amounts backed up by the home’s fair market value, as determined by the very, very most recent sales - not sales from six months or a year ago.

2.  Max out and show off your close-ability. Yes: sellers care about getting top dollar for their homes, so offer price is the primary factor that makes or breaks your offer. However, sellers and their agents are uber-aware of the flip side of Essential Truth #1 (see above): a great deal that doesn’t close is no deal at all.  They are also on high alert from the last few years of very high contract cancellation rates, so sellers and listing agents will give top priority to offers that have both (a) strong prices and (b) a strong likelihood of closing (close-ability, in Tara-speak).

For you, as a buyer, to boost your offer’s close-ability, it helps to be informed about the most common deal killers: 
  • low appraisals
  • mortgage approval failures, and
  • condition problems revealed by inspections
are the top spoilers that ruin home sale transactions that are already in contract. 

If you’re going to try to win or at least compete with other offers on close-ability, it’s critical that you strike an appropriate balance between protecting your own interests and aggressively assuring the seller that you have done everything within your power to minimize or eliminate the risks that you will later have to back out of the transaction. 

With the help and expert advice of your agent, mortgage pro and/or attorney, consider strategic moves like:
  • shortened contingency periods (which mean the seller will get certainty that you’ll close the deal sooner than later)
  • documenting that your over-asking offer price is backed-up by nearby comparable sales (minimizing the risk of later appraisal problems) 
  • making an all-cash or high-down payment offer (if your resources allow)
  • offering to buy the home as-is (so long as you retain your inspection and loan contingencies) or even
  • obtaining inspections, appraisals or repair bids before making an offer and waiving the relevant contingencies up front.

CAVEAT:
I put these strategic suggestions out there to let you know that they are possible and know that they are seen as offer strengths by sellers. They are not always advisable and, in some cases, are actually unwise and inadvisable, in that they waive rights you might need to exercise in the future depending on the property and the facts of your finances and your life. Please, for the love of all that is sacred, do not incorporate these aggressive offer tactics without looking to your experienced, local real estate, mortgage and legal professionals for advice on their implications for your personal situation.

3.  Work with a well-respected agent and mortgage pro. If you’re house hunting in a desirable neighborhood or one with an insular community of agents, it can be advantageous to work with an agent who other agents (read: the seller’s listing agent) know and love - or at least one they have heard of and respect.

Collectively, the buyer’s agent and mortgage broker have a huge impact on how smoothly a transaction goes - and, sometimes, on whether it closes at all. No seller wants to entrust their most important transaction - and no listing agent wants to trust their livelihood - to someone they’ve never heard of and/or who has no track record of getting deals to close, smoothly: especially when they have many alternative offers from reputable agents they know they can trust to get the deal closed.

So, working with a well-known agent and a well-known local mortgage broker can certainly help give your offer a boost against other would-be buyers. Experience in your area and activity in the local real estate community are good indicators.  Even if the listing agent doesn’t know them personally, you want them to be able to ask around and hear good things from the other agents in their office or agent associations, or to at least have heard good things about working with your agent’s brokerage. 

With respect to mortgage brokers, it’s especially helpful to work with one from a well-known, local company. At least consider authorizing yours to talk with the listing agent via phone to discuss the strength of your qualifications and their own recent experiences working with appraisers and underwriters with the listing agent in a phone call (without divulging any truly confidential financial information), if the listing agent chooses to reach out. 

By no means does this exclude agents who are newer to the business. Working with an agent who has a polished website and smart activity on various social media channels or one who can provide the lisitng agent with a list of recent closed transactions they have worked on may help the seller and their agent feel more comfortable accepting an offer if your agent is new - or new to the area.

4.  Express your love for the home. I’ve written a lot about what I call the Seller Love Letter, a tool homeowners can use to ‘infect’ interested buyers with their own affection for the property. But here’s a tip from the last peak of the market: buyers can write love letters, too!  Allow me to be frank: if someone is offering $50,000 more than you are, chances are slim that you’ll beat their offer out with a letter or a YouTube video of your trio of pugs or smoke signals, no matter how poignantly they:
  • tell the sellers about yourself or your family 
  • express how much you love their home and
  • paint the picture of why it would be such an ideal setting for the next phase of your life.  

But - such a love letter may not hurt. In fact, it might even score you a counter-offer in a situation where the seller might otherwise have just outright accepted another, much-higher offer.  And your offer price is close or identical to your competitor’s? It might just score you a home.

P.S. - You should follow Trulia and Tara on Facebook!          

Comments

By Julia St. Marie,  Wed Jun 6 2012, 23:59
Outstanding Post
By Mark D Fleysher, MBA,  Thu Jun 7 2012, 09:43
Very awesome post, shared on Facebook.
By LaVina Pratt,  Thu Jun 7 2012, 09:49
It also can be added to have your offer as clean as possible without a lot of contingencies and inspections.
By Cindy Barron,  Thu Jun 7 2012, 09:51
I was glad to see you emphasize the importance of working with a well respected agent and mortgage lender...something many buyers fail to take into account. A listing agent owes it to their seller client to disclose if a particular lender is notorious for failing to close the sale or always needs an extension of closing date. Some buyers think a pre-qual letter from anyone is good enough to demonstrate their purchasing ability, and that's not the case.
One other tip I would add...if the buyer has the ability to pay cash instead of financing- cash is king!
By ayelenegusie,  Thu Jun 7 2012, 09:59
Full of nonsense. Unrealistic and not market oriented. The same thought that bankrupted the real state market.
By Ling,  Thu Jun 7 2012, 10:16
This is from realtor/seller prospective. totally disagree from buyer side about offering more $$ for the property unless you are able or have much $ to do so. There are always something out there that you can get. Do your own study and research!!
By Jaime Morrell,  Thu Jun 7 2012, 10:23
This is absolutely true! I am in the thick of this scenario with a few buyers in the South Orange County, CA area... The competition is fierce and the trend I am seeing is most of these buyers have 20% down or more ... If anyone is FHA out there it will be a tough ride in 'winning' a property right now...it might be best to try when the market settles after the summer months.
By Exrealtor,  Thu Jun 7 2012, 10:27
Spin, spin, spin Baby! Trying to make chicken salad out of chicken s...! Realtors are sharks and work for themselves FIRST and ALWAYS. Never forget it. I have tried to find selfless professionals and every one proves to be some combination of lazy, won't preview properties, makes people find the home online and all they do is make appointments to see them, they throw sold comps and math out the window on listings, they take listings knowing full well they are over priced, etc. I gave up my license because I was sick of working with mercenaries who would not lift a finger to help unless something was in it for them. I have seen them steal clients and back door each other. These hype articles are sickening. They try so hard to hide "the man behind the curtain" in Real Estate.
By Lewis (lou) Derr,  Thu Jun 7 2012, 10:33
Really marcus? absurd commissions, I bet when we figure out how much we work on a deal that may or may not close we make about 5.00 bucks an hour. As far a meddling incompetence, It sounds like you have been taken by a Bad Realtor. Poor baby, Lick your wounds and get over it. It was a good article. And for your information (just so you might by enlightened) the seller pays the commissions not the buyer. So having the buyer work for with the seller directly is a bad idea and shows just how much you do not know about the business. Anf the word is REALTOR. It actually stands for something. You are held to a much higher set of values when becoming a REALTOR. Just another tid bit of info for you. Go find a job and work for free for 3 months than you will see what it feels like to be an agent in a slow market.
By Bradley Gill,  Thu Jun 7 2012, 10:35
Interesting to see some negative comments above...I think the post is "spot-on" and is great insight for any buyer either in the home search or thinking about purchasing, and is especially true of the entry-level market right here in SIlicon Valley where we are experiencing a shortage of inventory and increased demand. But, market forces are all relative to your local market which is why it is wise to seek counsel from an experienced and active Realtor in your area.
By David Barr,  Thu Jun 7 2012, 10:36
Offer more than the list price, but then beware of low appraisals? Yet another ridiculous Trulia blog post.
By B,  Thu Jun 7 2012, 10:36
There is no face to face meetings as the majority of sales are with banks.
Do not chase the market consider waiting out longer, perhaps we will even go down again.
By Pierre Ghiuzelian,  Thu Jun 7 2012, 10:39
They are all stupid ideas and a dizaster for the buyer.
By Jim Groff,  Thu Jun 7 2012, 10:42
I hear your complaints, Exrealtor, but now how about giving us the solution.
By Bonodino,  Thu Jun 7 2012, 10:45
Finally, I have found a voice of reason! As the owner of several homes and having sold several as well, I am disturbed by the manner in which potential buyers will interpret the depressed market as free license to make offensively unrealistic "low-ball"offers! It seems as if they are "out for blood" and seeking to "steal" a property rather than make a realistic purchase, commensurate to the current market trends!
By Michael Kupritz,  Thu Jun 7 2012, 10:49
Excellent article, Tara.

As any good economist could tell you, people's decisions are based only partially upon financial considerations and their own best interests. Emotions come into play. If you fail to personalize the transaction, you are just a pile of numbers to the seller. If you hire a pit-bull to represent you, you risk alienating the seller. If the seller doesn't trust you to complete the transaction, a high offer means nothing. In more than twenty years as a real estate broker, I've seen many homes go to buyers (or renters) whose offers weren't the highest dollar amount.

I would add one more item to your list. Find out what motivates the seller. This is the most important rule in negotiating -- and the most frequently overlooked. Perhaps the seller is waiting for a house to be built and would prefer a long settlement so they don't have to move twice. Perhaps the seller has already bought another home and needs a quick settlement to remain solvent. Don't assume. Ask. Tailor your offer to the seller's specific needs, and you have a much better chance of snagging that dream home.
By Fred Strickroot,  Thu Jun 7 2012, 10:49
Very useful tips Tara. Thank you.
By jennifera,  Thu Jun 7 2012, 10:58
i have been trying to buy a house for over 6 months now, this article is right on! I think it come from the sellers and buyers point of veiw! well said!
By Mark Connelly,  Thu Jun 7 2012, 10:58
I was hoping to read something that wasn't common sense, until next time. Lou has to be from Texas...no one else would get that fired up over a pun posting. Great insight on the FHA situation Jaime, in North County San Diego, as a buyer, we are experiencing the same.
By Tbird71,  Thu Jun 7 2012, 11:00
I just bought a home using this exact same scenario. Look, a LOT of these (esp in south florida) are foreclosures. Some are WAY under market. But the good ones and cheap newer ones in forclosure status are about gone.

(I'm talking in the 45-65000 range here folks)

BANKS HAVE A STRATEGY FOR OFFLOADING THESE:

They'll typically price them high then continue down until they get into a multiple offer situation, knowing the highest and best bid will be above the asking price. A lot of these will be only cash offer, so if you're financing you may not qualify. I've seen some savvy homeowners doing the same thing. Basically an auction, bottom line is they're gonna move that house! The opportunities are out there, just look for them.

For instance, mine: Listed in March: 85000.00 Reduced in April: 64,900 And finally in May: A whopping 49,900!!! WAY under market. They know they'll have a multiple offer situation at that point (they did) but just offering at or a little over ain't gonna get it. The home is already 15000+ under market!! Go in with a little over 10% of the ask (I offered a tad over 55000.00) Everone else was too low and they threw everyone else out and voila! We won the home. BE REALISTIC...recognize a deal when you see it. Cause if you don't there's others like me who WILL....Tom...NOW from Sunny South Florida
By Stephen Kass,  Thu Jun 7 2012, 11:11
Tara, as usual you have a great blog. Any realtor that has ever worked this market with the buyers you reference know how true your comments are. I would guess that the negative comments are form the ones who didn't and still don't get it.
By Michael Kupritz,  Thu Jun 7 2012, 11:17
Tbird71 makes an excellent point that may not be obvious from the article, although Tara touches on it.

Your bid should be relative to the current market value of the property. During periods when home prices are rising rapidly (whether we're in one of those periods now is debatable, but if you're in a competitive bidding situation, you can assume we are), the winning bid usually will be slightly above market value.

Obviously, your bid must also be an amount you can afford, but bear in mind that the market doesn't care what you can afford. ;-)
By Nora Spero,  Thu Jun 7 2012, 11:19
Excellent article, and Lewis - you are spot -on!
By Pennyhoule,  Thu Jun 7 2012, 11:23
Too bad this advice wasn't up a year ago when I started looking. Everything is selling OVER list price now and the competition from cash investors is killing qualified buyers like myself. I've lost out on 6 properties, even when I've made the higher offer, because someone else is waving cash at the seller. Buyers are really nuts if they think they can still low-ball on decent properties, at least in my area...and the one thing I've learned is you really do need good representation because there are a lot of sharks out there and unscrupulous sellers/realtors who are pulling a lot of sneaky stuff. Be sure to have a really good realtor backed by an experienced, INSURED broker, who can save you from the massive pitfalls that are out there right now. In the past I would have agreed about commissions being overpriced, but the things I've witnessed and experienced in the past year with sellers having all the power, has made me change my mind about that. I would not go into a situation without the confidence of having an insured broker behind me who can bail me out of some of the financial tragedies people are facing who went in without representation. My agent has saved me more times than I can count from foolishly walking into a situation that sounded harmless on the surface but would have been a really bad move in the end. Caution is the key, along with realistic expectations. It's a great time to buy even at existing prices, which are still depressed enough that low balling is just a poor strategy, unless you're looking at substandard properties and/or don't care if your offer is accepted.
By Rod,  Thu Jun 7 2012, 11:27
Not to put too fine a point on it, but that line is not from a songwriter. Pete Seeger borrowed that song's lyrics from Ecclesiastes 3:1.
By Jim,  Thu Jun 7 2012, 11:31
Offer more than list and run the risk of being stuck with stagnant value for the next 5-10 years.
By Tbird71,  Thu Jun 7 2012, 11:37
Couple other tips I've learned:

1. DO YOUR DUE DILIGENCE...Sometimes (tho not always) there's a reason the home is priced so low. Hire a competent home inspector and check everything from defective chinese drywall to mold to foundation to roof to title insurance and beyond.. Make sure you know what you're buying!

2. On the offer, go in with a higher down payment and a earlier close date. You'll still have your 10 day inspection period and if it's not what it seems you can get that back. If you can afford more down and have finances in place banks (or individuals) know you're serious and they can cash out earlier. It helps.

3. Do your comps of the area and get familiar with what similiar homes are going for. Take it from an ex lowballer, you're wasting your time trying to buy a 100000 home for 65000. STUDY THE HOMES LISTING HISTORY. This isn't Wal Mart. If the home's already 10-20000 under the market and a good one, rest assured that more than likely you're not going to buy it for listed value. (Refer to my post above) However, as in my case, the "lowball" offer that would have been made was the listed price! I finally figured that out, and as any competent realtor will tell you just because the property is listed at a certain price doesn't necessairily mean that's the new price set in stone. If it's recently dropped to less than market value why would you try to offer less? It's a time waster. When you're already practically stealing something, don't push your luck.

Let's hear from some other actual recent buyers out there and their take on all this!
By Kim Mulligan,  Thu Jun 7 2012, 11:48
Some of these detractors might be in a different market. The author is from SF and like parts of the greater Seattle area, this advice is still spot on. In fact we used all three of these suggestions last week (before I read this post) and still didn't win out on the bidding process. For properties that have an "emotional" appeal, the competition is fierce and there are indeed bidding wars (sometimes by design of the listing agent). I'm sure it's market dependent. I ethically use whatever tactics will bring my clients to the top of the stack .I used these as well as tighter timelines for inspections and flexibility for the sellers unusual situation.
By Rick Lemmons,  Thu Jun 7 2012, 11:51
I have enjoyed reading all the negative comments which offer better solutions than Tara. Oh wait, they didn't offer any advice..only complaints. Perhaps @Exrealtor is an ex for a reason? or @mawhorecus has lost a bid becasue he bid too low?

When its multiple offers I provide my clients with the comps, give my advice, answer questions, help them balance the conflict between emotion (have to have this house) and logic (how much to pay) and finally arrive at an offer price. Then, with their permission I add another $27 or $53 to it. I also let them know that they will always know how much they lost by but never how much they won by.
By Tita Garcia, CDPE, ABR, GRI, CSP, LMC, SFR,  Thu Jun 7 2012, 11:57
Excellent information. Posted on Facebook as well.
By Helen Oliveri,  Thu Jun 7 2012, 12:03
Great tips, Tara.
By valerie,  Thu Jun 7 2012, 12:08
we offered 15,000 more than asking on a condo when we found out they already accepted an offer at full listed price. it worked. it still made the purchase a good investment.
By Shaley,  Thu Jun 7 2012, 12:28
I have a question...may sound dumb....but... why would the seller care if you have a 20% down payment or if you are using FHA? Wouldn't they get the same total price from the buyer? A $200,000 purchase price is a $200,000 purchase price. Wouldn't the bank that the buyer uses be the one concerned with the amount of the downpayment? If you get approved for your loan, the seller gets paid the $200,000, and your bank deals with your mortgage.

What am I missing here?
By PassingThru,  Thu Jun 7 2012, 12:33
The point about the buyer love letter....never, ever do it. As a buyer, I don't want a counter offer, just acceptance. Never talk about how much you like something to the seller, then they know they have you.
By Robert Sizer,  Thu Jun 7 2012, 12:37
With low inventory levels in North San Diego County, competition at the entry level market has been fierce. In many cases I've advised the buyer to keep seller paid costs including pest control report/repairs & home warranty out of the offer to increase the net offer. I work with them to make their highest & best offer possible, paying for the Home Warranty & helping with repairs outside of escrow. Our brokerage practices a socially conscious business model donating 10% of each transaction to The Eye of A Needle Foundation which helps the homeless & less fortunate. http://www.eyeofaneedlefoundation.org
By Toyalee,  Thu Jun 7 2012, 12:51
I AM A BUYER GREAT INFO, BUT I WOULD NOT PAY $30K OVER LIST PRICE TO WIN BECAUSE ITS MORE THEN JUST WINNING, WINNING DOES NOT GUARANTEE YOU THE HOME AND IF YOU DO CLOSE GOODLUCK WALKING TO A HOME WITH NO EQUITY.GREED IS A KILLER TO ALL THE BANKERS AND GUESS WHAT I JUST WON A BID WITH PUTTING ONLY $100 OVER....PLUS IT APPRAISED $25K MORE SO I SAY DONT FIGHT BE GENTLE WITH YOUR OFFERS AND THE HOME IS YOURS.....
By Derek Suring,  Thu Jun 7 2012, 12:52
Excellent article that explains many of the tips we've been using in markets with strong demand. Another one I'd add is to beware of how particular listing agents price properties. They all have different methods and skill at guiding their Sellers. Some, for instance, will use list price as a marketing tool and price low to generate interest. Others buy their listings and put them on the market at inflated amounts. A good Realtor actively working a core area should be able to use this information to the Buyer's advantage.
By Michael Kupritz,  Thu Jun 7 2012, 12:54
@Shaley, not a dumb question at all.

The seller must make a judgment call about whether you are likely to obtain financing. A competent and ethical agent will advise the seller that a buyer with a larger downpayment is more likely to obtain financing. The higher liklihood of securing financing, the stronger the offer.

A larger earnest money deposit makes an offer stronger as well. The more you are willing to risk, the more serious you are likely to be about going to settlement.
By Jordon Wheeler,  Thu Jun 7 2012, 13:05
Good points Tara. It's frustrating for buyers who keep hitting the multiple offers wall. Some buyers get discouraged and give up. Others hang in there and get the deal. Deals that are financed and require an appraisal are the roller coaster rides.
By Dustin Lema,  Thu Jun 7 2012, 13:28
It's worrisome to me the number of replies here about "Excellent article..." and "Excellent information..." and "Very useful" on an article that seems to be for very tactical market scenarios (specifically very high demand areas); as opposed to sound general advice.

Seriously, how excellent is offering more than listing price when the appraisals come in low? How many buyers aren't financing in general? And how many deals fall through because of low appraisals?

I'm sorry to say that some real estate agents posting here seem more like cheerleaders for their profession rather than professionals.
By George Riffone,  Thu Jun 7 2012, 13:30
How TRUE, I just recently closed a property after advising my buyer in exactly what is written above. Also lost deals after advising the buyer's to do the the same and they did not listen, soooo their still looking!!!!!
By Neil,  Thu Jun 7 2012, 13:37
Honestly, buyers should steer clear of buying anything until the house market is less volatile. It is not a buyers marker right now and sellers are listing there homes very low to purposely start a bidding war and have multiple people place offers - sneaky and shady doings if you ask me. Also, there is crap out there for inventory - buyers need to regain control of the market!!! Buyers should unite and strike!
By Neil,  Thu Jun 7 2012, 13:38
@Michael Kupritz - your posts are awesome. Wish you were in the SF Bay Area - would love to have you as a realtor.
By Jen Donier,  Thu Jun 7 2012, 13:45
Wish that someone would come buy our home ASAP need to sell due to health. A lot of people find it a great place, peaceful they say, beautiful, but don't have the ability to buy due to economy. We have lowered the price twice now and just can't go much lower and still buy elsewhere.
By Icarus,  Thu Jun 7 2012, 13:47
These aren't exactly secrets nor would I describe them as full blown strategies. They are good tips that may or may not apply to your particular situation. If you're buying a house that the comps show is worth $400k, making a $300K offer isn't gonna fly unless the house has been on the market for 120 days and there is something wrong with it like being next door to a nuclear power plant or something.

I think you are also confusing putting more earnest money down than putting a larger down payment down. More earnest money shows the seller you have some skin in the game but they get paid whether you pay them cash or the bank cuts a check via a loan.
By Rick Lemmons,  Thu Jun 7 2012, 14:08
@Neil, nothing sneaky and shady about pricing a property to generate multiple offers. Remember as a buyer you are competing against other buyers for the property, you are not competing against the Seller. Real Estate is a market subject to the laws of supply and demand. Low supply of homes and large number of buyers = higher prices. High supply of homes and fewer buyers = lower prices. Low financing brings more buyers into the market which will drive up pricing. Waiting to buy while prices are rising might not be a good strategy.
By Allan Erps,  Thu Jun 7 2012, 14:28
Best thing I can say to Marcus & ExRealtor is that the two of you do not really know much about anything. Recommending a Listing Agent to save fees that you do not pay?? Greedy, sharks maybe there is a percentage of that in EVERY business. The two of you are a pair that could beat a full house!! GROW UP. Reason for being Ex is you failed and sour grapes to you both!
By Gloria Commiso,  Thu Jun 7 2012, 14:48
One of the best ways is to "present" an offer in person if the listing agent will allow.....I know the first thing people will say is that the listing agent doesnt have time. I followed a lisitng agent to her car just to try to pitch an offer. In addition, I have brought coffee to a busy agent just to have ten minutes of face time. I also flew to florida a day early to present to an agent that was at a conference i was attending. I have other ideas that i did'nt see here that have worked in the past but Im keeping some of my secrets to myself!
By Kari Walker,  Thu Jun 7 2012, 15:04
This is a great article but just a little too wordy. It could be shortened and get across the same points.
By marcus,  Thu Jun 7 2012, 15:23
Exrealtor...one honest soul in a realm of crooks
By Voices Member,  Thu Jun 7 2012, 15:25
This is an EXCELLENT article for many reasons. And it's all about the local market -- in some markets this advice is not practical at all.

Just today, as I was going over recent sold comps I saw a listing that was UNDER-PRICED (the opposite of the low ball offer). The listing agent priced it well below current market and got 5 offers and created a bidding war. It was on the books for $254,000 sold for $268,000 in three days. Ecen at the SOLD price, it was still market value fof the condition, location and price.

I don't like it when listing agents do this. But, as the listing agent they're job is to sell the properyt in the least amount of time for the most amount of money. Mission accomplished.
By Kate Weare,  Thu Jun 7 2012, 15:25
I'm a buyer looking in Brooklyn and read this post with a bit of chagrin. While I don't think the market I'm in demands over ask offers, I do think I'm behind the pricing curve and a year of on/off looking has educated us but not helped us close as prices crept higher. So this was useful to see in print. I am in a market with very insular family brokers who control most properties and avoid buyers brokers if they can, so that is not an option for us it would seem. Our most recent offer included 40% down but we lost to an all cash buyer, which is not uncommon here. When your in an area where local agents don't fluidly co-broke or post on an MLS it can be steep learning for a buyer.

Since talking to the owner is rare, what I would like to know is how to get an agent's attention , we can barely get them to call us with new inventory, we have to hunt for signs! The modern web for RE somehow missed us.
By Lauren Rowell,  Thu Jun 7 2012, 15:29
@Exrealtor: what do you advise? I've noticed prices are going up in areas of Arizona that are unrealistic, to say the least. In other words, prices are going up in very small towns for houses that are essentially not worth the cost, in any market. (These houses are located east of the Phoenix metro area.) Just 6 weeks ago, I saw a house advertised for $25,000, and now they're asking $42,000 - this is for a 1-bedroom, 1-bath "not so nice" place. What is going on? Most economists I've spoken with have said the Phoenix area will take at least 4-5 more years to recover, and I myself have seen many, many "undeveloped" developments (streets, sidewalks, and lighting cables are constructed, but no houses). I would sincerely welcome your insights on this matter. Thanks in advance.
By Lauren Rowell,  Thu Jun 7 2012, 15:44
@MIchael Kupritz: I just now noticed you're in the Baltimore area, so I don't think you would be interested in helping me! I'm looking for a home in the Tucson area of Arizona, near the eastern part of the city, that borders the national forest. I can't seem to get decent advice from agents in this area, but I'll be alright, since I'm taking my time on this one. Thank you for your insights, though, as they are very much appreciated.
By Fantamas,  Thu Jun 7 2012, 18:20
Only listing agent can help you to buy the house you like. Talk to listing agent, not to your real estate agent. Then you have more chanses to get that property if negotiate it with seller's agent. :-0 Because this agent is interesting to be buyers agent too, to grab more money of that deal for buyer.
I just bought the condo and listing agent helped me. Of course I overpaid $10,000.00, because appraisal was less cost than sale price. But it worth it. My lender gave me a good deal, and title negotiated closing almost on time. So, we were working like a team through this purchase. Even now, (my real estate husband is a contractor), he provides some FREE repair service or for some low cost, that bits up other contractors cost.
I'm happy with my purchase.
By Dwhite0221,  Thu Jun 7 2012, 20:08
As an owner of over 50 homes and a Real Estate Broker I can tell you the "truths" in this post only go so far, I have been recently purchasing more homes and find that most of the investor market is controlled by banks. The banks simply have an online input system for the offer the offer with the highest bottom line wins, there is no place to enter "love letters". All cash offers are put to the top of the list and of course the shortest or lack of contingencies make a difference. Nobody cares who the offereing agent is, just the money. Wnen the banks are marginalized fromt hsi business maybe the personal touches will make a difference.
By Patricia,  Thu Jun 7 2012, 20:35
♥ ♥ ♥ ♥ ♥ ♥ ♥ ♥
Love letters DO work! My sister just purchased a home a month ago. House went on the market and the day it listed - 6 offers. It was one street over from where they already lived, they just were looking for a bigger home.

They had been beaten out on several homes over the last few months having been listed and under contract in one day. (yes, I am talking Spring 2012 in Phoenix)

So, they saw the home the morning it listed, submitted an offer.
Next day, found there were 5 other offers, countered for $20k over asking and added a love letter. (Oh, and they were pre-qualified)

The owners accepted their offer telling them that there was one other offer that was for more but the knowledge that another family from the neighborhood was coming in to love the home as much as they had was what closed the deal.

♥ ♥ ♥ ♥ ♥ ♥ ♥ ♥
By Flavia Brown,  Thu Jun 7 2012, 21:42
Tara's article is okay, but nothing new to seasoned agents. One thing that jumps out of the page and is quite disturbing is the word "secret" in the title. It is one of the most overused words on the Internet, and I cringe when I read it. It means nothing, but reeks with "snake oil"-type presentations. A good writer will try to avoid triteness. Overused words become meaningless. Another example is in Brad Gill's post (above) where he uses "Spot on." That term has been beaten to death. Actually, Tara does a fairly good job of writing for not having much training. In writing classes and books writers are taught to "write tight." This article brings new meaning to "write loose."
By Spring,  Fri Jun 8 2012, 00:07
Get a good agent, it helps keep down the stress level, and going crazy for fear of losing out- An agent can make or break a deal either by not keeping in touch with the buyer or the seller, or the lender and finding out important information that needs to be relaid back either to a seller or a buyer or even finding out who will appraise a home and when it will be done.. These are very important issues that needs to be discussed. All the money in the world will not buy a home if the agent is not relaying information back ,keeping in contact and giving buyers, sellers, or lenders information.
By Barb Mihalik,  Fri Jun 8 2012, 04:57
I've advised 2 buyers to offer full price in the past 3 months. One of them lost out to a full price cash offer but I found her another good property which went for close to list price. The second buyer was stunned when I suggested a full price offer, but after reviewing the comparable sales in the VERY recent past, it's evident that the good ones fly off the shelf. This property has 3 offers on it, but I've prepared the buyer to go over list if necessary, as the market data supports it. This is a very good indication that the market has shifted in a positive direction. Sellers who price correctly and have properties that show well and are in good condition should see quick results in our market.
By Meanjeanne5,  Fri Jun 8 2012, 05:03
Tara-Thank you for educating the buyers and sellers with truth due to the dignity it allows. I read your posts as a FSBO owner and 25 yr appraiser. Like your style-Keep up the good work!
By Rita Lamar,  Fri Jun 8 2012, 05:48
Great article! For the last several months, I have noticed a trend of homes being brought on the market for significantly lower list price than comps for their neighborhood or area -To create urgency and have the home "bid" up and have a happy seller and buyer at closing. I've given similar advise to my buyers, but the concept can be rather challenging for buyers (with all the national media coverage re: foreclosures, lower prices, etc.) to grasp the potential of being outbid by someone else by offering asking price and / or above. The important item that must be stressed is that prices are ALREADY down and provided the comps support your offer, put your best foot forward to "begin" the first phase of negotiations... "if you want this home, let's go get it!" There are still many phases to get through prior to closing. In many cases, MANY buyers are still getting more of a steal than even a deal. Sometimes I find it helpful and even necessary to gently remind clients of this (again when applicable). Thanks again for the good info!
By George Devendorf,  Fri Jun 8 2012, 06:19
Fine for a sellers market, but really now, it's far from a sellers market.
By Lee Olson,  Fri Jun 8 2012, 07:12
The advice in he article is location dependant. The principles of what was written can be re-applied to fit other situations. E.g., paying attention to the Seller's needs always is to the Buyer's advantage.

There is an entirely dfferent set of tactics which are more successful in a market like Columbia South Carolina which has seen precious few multiple offers sine the recession. I suspect that there are more than a few markets like Columbia. :
By Karen Steed,  Fri Jun 8 2012, 10:03
In Georgia in Haralson and Carroll counties, foreclosures are being priced below market, and getting multiple offers in days. Desirable properties are under contract by day three. Cash or conventional is the preferred payout. Just lost an offer yesterday for full price with an FHA loan, buyer paying all closing costs to a cash buyer.
By Anna Torres,  Fri Jun 8 2012, 10:04
Great post! I wish all Buyers would read it. I work with Buyers all the time, showing 20-60 properties, getting rejected again and again and they don't listen, doing the same mistake over and over again. After 3-6 months of a rollocoaster, they finally realize it.............and all this time I work for free. Glamorous life of a Real Estate Agent! :o))
By millbayhomes,  Fri Jun 8 2012, 11:07
You forgot the most important strategy in my opinion: Make your offer with the sellers agent. We know all agents love to double-end deals.
By Valerie MacKnight,  Fri Jun 8 2012, 11:13
I've been involved in several multiple offer situations this spring. I tell all buyers not to underestimate the "love letter." In one situation, the offers were identical--it was the love letter that was the deciding factor. Some buyers’ offers backfire when they assert pressure with messages like, “we need an answer now, because there's another home we want to make an offer on." Or, telling the seller the things they don't like about the house, in an attempt to get a better deal. That’s a sure way to have your offer rejected or countered higher than the seller would have done otherwise.
By Amelia Antonelli,  Fri Jun 8 2012, 15:30
Thank you Tara for an informative article.
I've been involved with several multiple offer scenarios recently and give my clients much of the same advice.
Cash is king, offer list or even above if you know you don't want to lose it. I tell my clients to ask themselves 'what are you willing to pay for this home based on all the homes you've seen?', etc...
It's been working well for me and of course my buyers are happy when they 'WIN".
That's what it's all about, making the client happy and closing the deal.
By DeeDee Riley,  Fri Jun 8 2012, 19:17
Excellent tips, Tara! You've reinforced what I try and tell my buyers!
Thank you!!!
By Michael Kupritz,  Fri Jun 8 2012, 19:57
@Neil and Lauren: You are right that I can work only with clients in Maryland, the state in which I am licensed. But I'm glad you found my advice helpful, and I appreciate your comments. You made my day.
By Karl Hershberger,  Sat Jun 9 2012, 07:09
A very good article broaching some basics. Much of it my seem obvious, but it all is very true and helpful to know.
By Erh,  Sat Jun 9 2012, 08:18
lots of imformation, but as many houses that I HAVE BOUGHT AND SOLD..mY AGENTS NEVER TOLD SELLERS OF MY LOVE FOR THEIR HOUSE. Don't think INVESTORS WHO ARE GOING TO RENT THEIR HOUSES OUT are going to tell you or any agent that they love your property. I WILL KEEP READING YOUR IMPUT
By Terry W. Irmer,  Sun Jun 10 2012, 09:36
The Love letter is for when a buyer has come close to top of his available purchasing power and the owners seem like family oriented people. I E. Granny and Grandpa who don't need the big house any more sell to the younger family and reminisce about when they got a break when they were young with a family etc. These types of sympathy scenarios can get the house some times if they come across as genuine and real. I know , as a Broker Ive done it but only if i believe it my self and never as a ploy.
By Donna Davis,  Mon Jun 11 2012, 06:59
The love letter is ink wasted on short sales and foreclosures that make up much of our local market.
By Teresa P. Tan,  Mon Jun 11 2012, 13:29
Great article Tara! Especially if you are offering on REO's. I have done many listings that are bankowned and this is definitely not the time to cut offer by 20 or more percent. One advice is to really read the Offer Instructions on MLS and follow it carefully especially if it is an online offer management system. Many agents make mistakes and sometimes it is too late to correct them,
By Ismael Carlo,  Tue Jun 12 2012, 10:01
While this article is informative, I can't help but to shed some light on a few things that stood out when writing an offer. First it does not mention proof of funds when submitting an offer. Pre-approval may not be a enough and when an agent is looking at the holy grail of the MLS it is constantly placed in the agents remarks section. Also, what about reducing your commission? say an eighth to a quarter point, hell make it a half. If a property is going for 300K and you as a Realtor $7,500 is $6,000.00 gonna make that much of a difference if it has a better chance at being accepted? $6000.00 of something is better than 0 of nothing!
By Kevin Olson & Jessica Laude,  Tue Jun 12 2012, 10:17
I never realized offering over full asking price was a secret to getting an acceptance. Who came up with that idea and kept it from so many for so long?
By Ismael Carlo,  Tue Jun 12 2012, 10:30
another thing, what about presenting the DU approval and ratios? Have their lender work with you the Agent to present the facts as they are facts. Again, I am saying that this will get your clients offer accepted. Also to recap on my above post, in the love letter you can say that you will credit the seller the .125 to a half point back at the close of escrow....Remember, all will benefit, seller, buyer and agent representing the buyer......Liasting agent just makes his gravy. LOL!
By J R,  Wed Jun 13 2012, 05:57
Keep going in low then, Ling! LIke Tara said, some people have to lose 4 or 5 homes before they learn their strategy ain't working!
By Russell Grether,  Mon Jul 2 2012, 10:58
Fantastic article. In competitive markets I always tell my clients to put 'their best foot forward' if they really want the property and they know there is competition.

http://www.malibuluxuryrealty.com
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By Voices Member,  Fri May 24 2013, 14:42
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