How To Navigate in a Seller's Market
I know you've read and heard over and over what a highly competitive market we are in. The Bay Area always has been a very desirable place to live, and with low inventory, high demand and lots of buyers out there (both all cash and financing buyers), this truly is a strong sellers market. Having said that, a buyer can compete and win. Read on!
When working with a buyer, many of us put in offers for our clients only to find we are in a multiple offer situation, repeatedly... and this can cause all of us, clients and agents, to feel stressed and anxious.
So, what is the best way to navigate the market? I find the best thing I can do is, right from the beginning, be completely honest with my clients by giving them all the facts, realistic possibilities and expectations and by running different scenarios by them. I even role play with them so they know what kind of things could happen after putting an offer in.
This also means we learn by doing and that means you have to ask yourself question "how will I feel if I don't get this property?" If the answer is that you want and must have that property, you have to be prepared to possibly, if not probably, offer over the asking price, consider a shorter escrow period, a free-rent back to the seller or even releasing certain contingencies with the offer. If you are financing a purchase and want to shorten the escrow period, you must make sure you can by checking with your mortgage professional. New lending laws went into effect recently that will affect closing timelines. Additionally, lenders are now responsible for certain document preparation that previously the title company could handle. Obviously these things put a lot of pressure and risk on a buyer. Sometimes a buyer can do much of their due diligence prior to writing an offer, but the phrase, "Buyer Beware," certainly comes in to play in this scenario.
Also, we have to think about who is selling the house. If it is someone who is simply flipping it, it may be all and only about the price they can get, with the best terms. On the other hand, if it is a family or family members selling a much loved home, offering top dollar, great terms and a hand written letter and even pictures can help to win the deal! I recently represented a Seller who chose the offer they wanted based on three things: the price offered, the quick escrow and pictures the buyers children did of themselves playing in the fruit tree in the backyard. My sellers had lived in the home for 35 years and raised 4 children there and it really spoke to them that these particular buyers' children loved the property!
I had another recent experience, where my buyers noticed at the Open House that the seller had dogs. With our offer, my clients wrote a letter about themselves and included a picture of themselves with their dog. There were 5 offers on the property and ours was chosen. The seller later told us that not only was it the dog in the picture that sealed the deal, but the letter my buyers wrote talked about one of them being in an occupation that the Seller greatly admired and wanted them to have the property!
So back to the question, "how do I get the property I want?" It simply means that both the buyer and the agent must, must, must do their homework, be fully prepared to make some quick decisions, make sure if you are getting a loan for your purchase that you know exactly what your purchase limit is and needed lending timeframe, and most importantly, keep the faith and don't give up. When I have a buyer whose offer isn't chosen, I tell them "that just means there is a better property out there for you and we will find it." And, I mean it.
If you would like more information about our market or just want to chat about it, give me a call (415)640-0336.