Welcome back, Multiple Offers and Bidding Wars!
In the current real estate market in Los Angeles, supply of available homes has decreased and demand has increased. As a result, attractive homes are receiving multiple offers, often times over the asking price. In order to win your next bidding war, you have to be smarter then the average home buyer. Your offer needs to be the most attractive if you want to win in a multiple offer situation.
Here are some tips.
1. Hire the best real estate agent for the job.
Think that all real estate agents are the same? Think again.
Here’s where your agent really earns his money. Ineffective agents kill your chances of getting the deal, while top-notch agents can insure your success of getting the home you most desire. Remember that in a multiple offer situation, it’s not just the strength of your offer (price, terms, etc.) that matters, but also your agent’s ability to present a strong offer package and sell themselves and you to the listing agent and seller.
2. Make your offer more attractive to the seller.
Ultimately, in a competitive situation, the seller is looking for the best offer – meaning the most amount of money and the best terms. Pay all cash if you can. Or, if you’re financing, bring a pre-approval letter from your lender. In either case, make an offer that is the highest price you’re willing to go, the first time out. In a seller’s market with low inventory, you have to be willing to offer over the asking price or lose to another buyer who will.
3. Submit a larger than normal earnest money deposit.
This deposit is part of your down payment. By increasing it above the customary 3%, you are showing the seller that you’re serious about closing. By offering just a bit more money sooner than later, it makes your offer more attractive to the seller.
4. Make a back-up offer.
Homes under contract can fall out of escrow for a myriad of reasons. If you make a solid and attractive back-up offer, you will be next in line in case the current transaction does not go through.
5. Personalize your offer.
Include a personalized note with the offer, telling the seller about yourself, your partner or family, why you want the home, what you love about it and why you deserve to win the offer. Include emotional elements. For example, “I can already picture my kids playing in the back yard.”
6. Give the sellers a little more time to move.
Offering the sellers even a few more days to move out after close of escrow, without asking for any compensation, can motivate them to want to accept your offer over someone else’s that is more rigid.
7. Lessen the time periods or even waive some contingencies.
The shorter and less contingencies contained within your offer, the more attractive it is to the seller. You will normally want a home inspection, but you can decrease the time frame available for due diligence. If you have a solid loan and your lender is comfortable doing it, you may choose to waive the loan contingency (or, again, shorten the time period). Or, based upon comparable sales, you may want to waive an appraisal contingency.
8. Determine what’s most important to the seller.
Ask your agent to find out what the seller wants or needs to seal the deal. It could be a faster closing or an extended escrow period. Maybe it’s a longer lease-back period. Find out and provide it to them!
9. Be flexible.
Being nice and accommodating can make a big difference. So can offering to pay for some items that would normally be paid for by the seller, such as a title policies, escrow fees or transfer fees.
10. Timing is everything!
When you find the right home, don’t wait to write an offer. Have your agent write the most attractive offer immediately!
*The above tips are for informational purposes only and do not represent formal legal or professional advice. Prior to signing any contract to purchase a home, please consult with your real estate professional and, as appropriate, your legal and tax advisors.