By SARAH KNAUER | Special to the Palisadian-Post
In the last couple of months, I have seen an incredible amount of competition among buyers—whether it is a $900,000 condo or $5 million home, with everything from three offers to over 40.
So today I wanted to share a few tips about how to be successful in these multiple offer situations.
- Starting off strong: I have seen buyers miss out on homes where they were the highest bidder in the end, but since they started off low, the sellers had a poor first impression of the buyer and chose someone else. Although it may seem counterintuitive to come in high right off the bat, keep in mind that you will have to come in even higher anyway, and that you want the sellers to remember you as the front runner and be excited about your offer from the very beginning.
- Best and final: All other things being equal, the buyer who is willing to pay the highest price gets the accepted offer. Most likely you’ll read the phrase “purchase price to be best and final over X price.” What do you do with that? My advice is always this, determine the highest price you would be willing to pay, where if you found out someone paid $5,000 more, your reaction would be, “Wow, they’re out of their minds,” and not, “Shucks, I wish I had come in at that price.” It’s not a fun counter to get, but it is the reality of the current environment, so start mentally preparing now.
- Escalation clause: An escalation clause can be an excellent way of ensuring you are the best priced offer if you truly fall in love with a property and have no max to what you are willing to spend. Essentially, you would write that the purchase price is “X” amount over the next highest offer. That amount could range from $5,000 to $50,000 or more depending on the price point of the home you’re looking at.
- All cash: If there is any way you can write an all-cash offer, DO IT! This does not preclude you from obtaining financing either during escrow or pulling your money out once the deal has closed. At Amalfi Estates, we partner with a lender who will help you write an all-cash offer, even if you only have a 20% down payment—they simply provide the proof of funds and cash to close in as little as 10 days.
- Shorten your time periods: Every couple of days helps make your offer stronger than someone else’s, so for example, write in a five-day inspection period and start scheduling them before your offer is even accepted, say you’ll remove your appraisal in 14 days instead of 17, loan instead of 21, close in 28 instead of 30 … I think you get the gist.
- Get creative: Anything else you can do to set yourself apart goes a long way. Offer to release your deposit with a full contingency removal, close quickly and let the seller lease back for free, have your lender call the listing agent directly so they feel good about all the working parties involved, and most importantly, write a letter to the sellers telling them why you love the home so they can feel a connection to you.
Sarah Knauer is a member of The Marguleas Team of Amalfi Estates. Sarah truly believes in giving back to her community and gives back 10% of her commission from each sale among five charities: Make-A-Wish, spcaLA, American Cancer Society, PATH, which helps homelessness, and Homeboy Industries. The team has been fortunate to have donated $1 million since 2014. Sarah can be reached on her cell at 310-663-4606 or firstname.lastname@example.org.
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