Due to the lack of inventory, and high demand for San Mateo real estate, multiple offers are very prevalent in the market right now. It will take a compelling offer to find its way into the acceptance circle.
Many sellers and listing agents are looking for more than just price. They’re also comparing the best terms, and of course the commitment of the prospective buyers. These three items are what’s going to win or lose the home. Make sure that you follow these basic rules and you can start packing.
Most listing agents know that if a home “falls out of contract” after an accepted offer, they’re going to lose a lot of the momentum that the home had when it first hit the market. They really want to avoid losing this valuable momentum. Make sure that you and your agent make it abundantly clear that you really WANT the property, and that you’re committed to closing on time. There’s a few ways you can do this. First, keep your contingencies SHORT. If you have a property condition contingency, do you really need more than three or four days if there’s something further you need to investigate? You shouldn’t. Get your inspectors/contractors out there quickly and don’t delay! If the home has all the necessary disclosures/reports and there are no red flags, consider not putting any property condition contingency in the contract at all (but make sure you always do your homework). If you are going to be obtaining new financing to purchase the home (which most of us do) make sure that you already have bank approval. Find a mortgage broker that can be very aggressive with a financing contingency. You should try not to put the standard 17 days on the CAR purchase agreement. This makes your offer look weak! You will lead the seller to believe you may not be able to get the loan. The less days the better, but make sure your mortgage broker can meet specifications, otherwise you’re going to have to ask for an extension and you don’t want that either.
Put a full 3% deposit, this goes without saying, anything less shows a lack of commitment.
Have your agent present the offer in person. Especially if your agent doesn’t have a personal relationship with the listing agent. Sometimes a buyers agent will even have the opportunity to present the offer to the sellers themselves. A little tip: when referring to an offer with a seller, don’t call it an “offer” call it a “proposal”. Sales studies have shown that it sounds better, and an “offer” implies that you’re not giving them exactly what they want. Get there in person and have him/her explain who YOU (the buyers) are, why they love the home and how many homes they’ve seen (you’re not buying the first home you saw are you)? Make sure you’ve seen the inventory, and know how the listing stacks up. In our business building rapport never gets old. The more rapport your agent (and you) can build with the listing agent and seller, the more likely they’ll accept your offer.
Be prepared to open escrow and order the appraisal right away. Sellers love proactive buyers. There’s no better way to get things moving. Of course… if you can, offer a short close date. Less than 30 days is good. Make sure your agent and everyone else involved; title company, mortgage broker, the family and your agent are all on board and ready to move!
Put down 20% as an initial investment in your new home. It’s easier to get loans that are 80% loan to value. It shows that you have saved money and are ready to invest in your new lifestyle. I’ve seen with my clients many times when they’ve had 10% or 15%, once they tell the family that they’re going to “pull the trigger” and become homeowners the remaining down payment suddenly appears. and they have their 20% down payment. You will likely get a better interest rate and it will pay off in the long run even if you have to “borrow” money from family or friends. Many times mom and dad will let you borrow money with 0% interest 🙂
We’ve talked about terms and commitment, now here’s the biggie… PRICE! Yes, it’s no surprise that the price offered is going to be critical to the seller. Make sure you and your agent review recent comparable sales data. Sometimes in a multiple offer situation prices can quickly get inflated. Have an appraisal contingency in your offer if the home is difficult to “comp out”. Of course the less contingencies, the more appealing the “proposal” looks to the seller, but you always have to protect yourself as well. Make sure that you know what you think the home is worth, and what you’re willing to pay for it. If things get crazy due to multiple offers, stick to your guns! Don’t offer more than you think it’s worth, let someone else pay too much for it and you can wait for the next one.
Keep terms, commitment and price as competitive as possible. If you’re lacking in one area, try and boost up one of the other areas. Multiple offers are going to be here to stay for at least the next 8-10 months.
I’m always willing to help you with your research, diligence, and offers. Let me know if there’s anything I can do to help.