Tips for Bay Area Home Buyers Making Competitive Bids
This is an oldie, originally published in 2005, but it’s a good refresher on how to make a bid for a property - especially in the Bay Area. Millions of rich people are moving in every day, and millions more are getting rich from IPOs everyday - the competition is fierce so bring your “A” game!
The article had 8 tips, but we’re smart people so we’ll skip the usual ones and go straight to the killer tips:
RealEstateJournal | Eight Tips for Buyers Making Competitive Bids
Research the sellers. Find out how motivated they are to sell and whether they want to buy another home. In this case, you might be able to make your bid more attractive by offering such concessions in your bid as allowing them to stay in your home for free — also known as a “free rent-back” — after the sale, Ms. Edwards says. Knowing whether a property is being sold to settle a will is also important, because these sales are mostly driven by how much money they can generate, she adds.Bid an odd-numbered amount. Most buyers typically offer a round number, such as $400,000 or $405,000 on a home selling for $395,000. Try to determine the highest amount you believe other bidders will offer. Then if you bid an uneven amount that’s slightly higher, say $407,250, you may outbid the highest round-numbered offer and win the property, says Ms. Vitacco.
Recently, clients of hers bid against seven other buyers on a home near Los Angeles listed for $399,000. Their bid of $413,750 was successful, since the next highest offer was $412,000. “I didn’t know where the next highest offer would go, but I did know that most people bid in round numbers,” says Ms. Vitacco.
Make your offer as clean as possible. Try to remove every factor in your offer that might deter a seller. Include the highest cash escrow and down payments you can afford and as much as possible of the remaining payment in cash. If you need financing, secure a letter from your lender stating that you have been approved for the loan. Eliminate as many contingencies as possible; offer to have the property inspected quickly and to pay local closing costs, such as special taxes; and be ready to close as soon as possible. Don’t ask for any appliances or fixtures that the owner wants and be sure to offer special assistance the owner might need, such as a free rent-back clause.
“Your ideal goal is for the seller to accept your offer outright, but they might counter you or make it a multiple-bidding situation, where the top three bidders can come back again,” says Ms. Edwards. “If the seller likes the buyer, price, financing or narrow contingencies, those people will have a chance to come back to the plate.”
Ok, even those are kind of obvious. But this next one is the killer:
Write a letter to the seller. “Don’t discount the emotional factor,” says Ms. Edwards. One way to set yourself apart is to write what she calls a “love letter” to the seller describing yourself and your partner and children, if you have them, and why you want the house. You might even include pictures your children have drawn of the home.
Ms. Grove and Ms. Wells included a photo from their wedding and described themselves in a personal letter to the owner of the home they wanted in San Rafael. Although they didn’t get the property, such letters often work because they set potential buyers apart and make the transaction less about money, says Ms. Edwards. “It sounds cheesy, but it does work,” she says. “The cheesier the better.”
One of her clients recently bought an Oakland Hills, Calif., home that attracted seven offers, even though the winning bid wasn’t the highest. The two-bedroom, one bath home was priced at about $450,000. The seller was a single woman who had worked hard to restore the property. Ms. Edwards’s client also was a single woman, so the Realtor advised her to write a letter describing herself and something she loved about the house and why she wanted it. Her bid, for about $500,000, was the second highest, but it was accepted.
Unfortunately, even this tip is well known. I personally know at least one family, maybe more, that did this to get their house.
So what can you do to win? The stakes are high - and like the father in Little Miss Sunshine said: “There are two kinds of people in this world, winners and losers.”
You want to be a winner right? You want to get that $1,098,000 1191 sqft 3br/1ba may-be-too-dangerous-to-enter in Cupertino for your children… right?
So what can you do to distinguish yourself to the seller? To let them know that you really really really want this place?
Here are 4 ideas I just brainstormed that really take the cake:
- Offer a night of … ummm … adult relations. Either one on your side, either one on their side. What? Demeaning? Disgusting? Oh come on… you just had your kids draw a picture of the house in crayon for the seller. Besides, think of the children! If you don’t get that house… they’ll grow up as renters.
- Ok, maybe they’re not into that? Then offer 1 kidney. Bad things happen, and it’s always good to have some extra organs around. Hopefully, there will be a blood match or otherwise…
- Buy them a place in Las Vegas. Come on, be reasonable - you want their house, but they have to live somewhere else. You can’t expect them to buy it, do you? So… buy them a place in Las Vegas - not quite as special as the Bay Area, but it could be the next big thing! And you can easily pay for this once you refi in 2 years and pull out $300k of equity from the 15% a year appreciation!
- Personal maid/chauffeur service for 5 years. You’ll go cook, clean, drive, bathe them around for a year. See “serfdom” to get some great ideas on how to do this job well.
Well, there you go! One of those ideas is bound to work. And if any of them help you win that bid, you owe me 1% commission.
Happy bidding! Remember, they’re not making any more land.
This Single Family Residence has the following features:
