Most properties in the Bay Area are sold as a result of multiple offers. We have more buyers than homes. With such low inventory, competition can be fierce. If you follow the tips outlined below, soon you will be moving into your new home!
- Ignore the asking price. The Bay Area is a very efficient market; no property goes unnoticed or slips past the multitudes of buyers. If the price looks to good to be true, it is.Get to know the market. Know the values of homes that have sold in the areas where you want to buy. Here at Urban Focus, we can get you all those details to make sure you are in the competitive game. When you make an offer, ignore the asking price and look at the value. Many times the asking price is hundreds of thousands of dollars below the true value.
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Don’t get caught up on what the seller paid for the property. It is not relevant. The only thing that matters is the value of the property today.
- Are there comparable properties on the market? If you want a 3-bedroom condo and there is only one on the market in the area you want to buy, competition will be considerable. In this market there really are only two choices, either increase the amount you offer (above value) or compromise on location or bedroom count and look elsewhere.
- When you find a home you like, make sure you let the listing agent know that you are interested. Here at Urban Focus, we have a 20+ year track record, we are well-known, and we often contact the listing agent on your behalf just to let them know you are interested.Visit the home every time the listing agent has it open. We are happy to go with you or feel free to wander around the home yourself. When you are viewing the house, introduce yourself to the listing agent, let her know you are working with an Urban Focus agent, and let her know you are very interested in the house.Contrary to what you may think you know about negotiating, this is not the time to hold your card close to your chest. You are going to get one shot at the property and you need the listing agent to know that you are the buyer for that property and that you want it! Emotion plays big in real estate. Many sellers want their home to go to someone who will love it as much as they do.You want the listing agent to know that if you are the chosen buyer you will follow through and close escrow on the property too.
- Make a clean offer. This may mean that you have to step outside your comfort zone and embrace the unknowns about the property. Most of the time, the seller has inspection reports in the disclosures. The seller purchases these inspections so you don’t have legal recourse against the inspectors but they can give you an indication of the property condition. If you must have inspections, then do it before the offer date. It will cost you around a thousand dollars, but it will also let the seller know you mean business and want the property.
- If you require financing, have your loan approved prior to making an offer. You will more than likely be competing with at least one all cash offer. About 1/3 of the transactions in San Francisco are all cash. In order to compete, you need to have your ducks in a row.
- Your lender can make or break the deal. Use a lender that has a good reputation with real estate agents. We work with many lenders and we are often able to recommend several for you to chose from. We prefer to work with those that are well-known in the city, have local underwriting, can get an appraisal in 14 days and is routinely ready to close escrow in 21 days. All are vetted and well respected.
If you just can’t take the stress of competitive bidding, then here are a few pointers for you:
- Pounce on a property that been reduced. In this market price reductions are not normal but they do occasionally occur. The hour a price reduction is posted to the MLS, check out the property. The seller is more than likely feeling a bit discouraged and the listing agent, having over promised, is wanting the property sold and off their hands. If the property meets your criteria (or is close), then you should make an offer quickly. Here at Urban Focus, once we know what you are looking for, we work tirelessly to keep you abreast of these opportunities.
- We help you watch for properties that set an offer date and are still on the market. These are much like price reductions. Be prepared to act quickly!
- Go into back-up position on a property. Often the listing agent would like to have a back-up offer in case the primary offer falls through.Being in back-up is perfect for the buyer as it does not obligate the buyer but locks the seller in. I’ve seen it work several times. I always ask my clients to go into back-up position. Last year I submitted an offer for a client at $1,700,000. She did not get the property but was offered back-up position at $1,700,000. My client accepted back-up but increased her offer to $1,725,000. This strategy let the seller know she meant business and also
gave the seller an incentive to back out of the accepted offer if the buyer did not perform to the terms of the contract. It worked like a charm. Seek out the back-up opportunities.
The last and most important tip I have for you is to partner with a good real estate agent. This might sound a bit self-serving but I promise you it is the most important of all the tips. A good agent is one that does not have hundreds of clients. They work closely with a select few buyers at one time. As you can see from the tips outlined above, staying abreast of the market, price reductions, offer dates, inventory, off-market opportunities and even back-up position opportunities is a full-time job.
You need an agent who will dedicate time to your search and has the contacts and knowledge to win in a competitive market. Call us at 415-813-5083.