Bidding wars will be more common, as prices get more reasonable.
Sellers who need to sell must list at an attractive price. The internet provides instant mass exposure, and – boom – many interested buyers show up. The short-sale house on Sonoma in Carmel Valley was open Monday morning for the first look, and the agent had 7 people waiting for him when he got there at 10:00am! By the end of the day he was calling it a ‘stampede’.
Don’t want to get in a bidding war? No problem, there will be years of opportunities ahead.
But if you find a house that suits your needs – here are some tips, in case there is competition:
Clean Offers – Simple offers work. If you can beef them up with a higher good-faith deposit, more down payment, and shorter escrow time, great. But a simple yet solid offer portrays a low-maintenance buyer, and sellers and listing agents appreciate those.
Conventional Offers – If you can avoid FHA/VA offers, especially those packed with credits, you’ll stand out from the crowd. If you have to go FHA, then go for it, but the appraisers are tougher on the condition of the property, so listing agents try to avoid them if possible.
Supporting Documentation – Every pre-qual letter these days say it’s a “pre-approval”, so if you really want to impress the seller/listing agent, include the bank’s actual approval sheet to prove it. If you win you have to show a bank statement as evidence of funds to close, you might as well send that in too, help your case.
Be First – Every once and a while there is a lull in the market, and you might get lucky. if you are the first to send in an offer, and the seller is anxious and doesn’t see or hear of any other offers, they might sign it. But be sure that you’re on to a great match for you, and not just jumpy.
Electronic Signature – Not required, but it is faster, easier, and gives the impression that the buyer’s agent is a top professional.
Introductory Letter – As goofy as these are, I think they make a difference. There is less personal interaction in the real estate business these days (we get many offers sent to us without a phone call from the buyer’s agent) and a simple paragraph on your intent would be favorable. The listing agents don’t care how many kids you have, or that you’ll live in this house forever, they want to know how strong you are – will you endure a tough bank addendum, buy “as-is”, and close on time.
Read Bank Addendums – It’s hard to read every bank addendum in advance, but if you can, and mention that, great. It is a stumbling block for many buyers, and the listing agents know it.
Here is a copy of one:
Buyer’s Agent Intro – There are so many agents that most are unknown to the listing agent. Have your agent submit their history/experience too. Don’t go crazy, a half-page will do, just enough to give the impression that they can close a deal.
Amount to Offer – Most banks are going to counter-offer for every buyer to submit their highest-and-best offer, but if you think you might be able to sneak in unscathed, at least offer full price and hope they sign it. If you know there are already offers in, make sure your agent gets the protocol on how it’ll be handled from the listing agent. There are NO rules or standards, the listing agent can handle it however they want – be clear on the procedure. Then know that most buyers cap out at 10% over list price, if you love the place, and can stomach paying 11% or more over list, that should take it.
The Dixon property had 13 offers, and went out at $351,000, or 11.5% over LP with a 20% down conventional offer, and there were higher FHA/VA offers submitted. But the possible low-appraisal issue wasn’t worth the risk.
There are more ideas – leave your thoughts in the comments section!