BIDDING WAR PREP 101

The Bay Area buyer market is like the Wild West these days. A buyer can spend 10 years saving up money for a down payment, find his/her dream home, and still be wiped out by the cash cows and trust fund beneficiaries. It can get a little heartbreaking for the buyers that are currently or were very recently in the the trenches with their agent making offer after offer.

Although Marin County continues to be much tamer than the rest of the Bay, the well-priced, well-located homes are still harboring multiple offer situations. Not all of us have the luxury of 5 million cash to spend. Here are the best ways to get prepared:

The goal is to mirror a cash offer as closely as you can -

• Strong Lender

• Your agent should recommend a lender that can begin underwriting your file when you apply for a pre-approval. Having your file fully underwritten can mean you write your offer with No Loan Contingency. This is one less hiccup the seller can expect in the transaction.

• At times, if you are putting enough cash down, the lender is confident in your ratios/ability to qualify AND the agent is confident in the home’s value, removing your Appraisal Contingency may also be a possibilityto make your offer stand out.

• Inspection Contingency

• Unfortunately, it has become the expectation of this market to remove as many contingencies as possible with your offer. If the house is extremely competitive on offer day, the buyer that wins will not have a Buyer’s Investigation/Inspection Contingency in place. Hopefully the home has a comprehensive disclosure packet to make you feel comfortable doing so.

• Quick Close

• Most sellers want the deal done quickly. Speak to your lender about the absolute minimum close time that would be reasonable. If the lender is strong, this will be achievable in 21-25 days.

• Agent Relationships

• Working with an experienced local agent is important for many reasons. In this market, an agent’s value is exposed when you are competing against others. If your agent has a reputation of professionalism, respect, and they know how to close deals, this will work to your favor.

• Rent Back

• Sometimes, sellers want some extra time to find their next place to buy or want to take their time in packing their things. If the buyer is flexible with their timeline, offering the seller a free rent back after close of escrow usually equates for some serious brownie points.

• Cover Letter

• Selling a house is emotional. Some sellers have an ideal buyer profile in their head. At times, they will take a lower price if it means selling to a buyer who they know will appreciate and care for the home. Although this sounds like it’ belongs in a Hallmark card, I’ve seen it work in my own experience. Write the seller a letter to tell them your plans for the home and what you appreciate about the property.

• Price

• Ahhhh, the P word. All of the above will help move your offer to the top of the pile, but the highest price usually will win. The offer price is heavily influenced by the number of offers expected and your own budget. Consult with your agent and make sure you feel comfortable and confident about your offer strategy on each property you target.

By Alex Narodny

alex@marinrealestate.net