A Great Realtor(R) Is a Great Weapon in a Bidding War, Part 1
With bidding getting crazy, your buyer’s agent is key in keeping things sane—and winning the house of your dreams. Today we show you 2 hot markets: California’s Silicon Valley and Portland, OR. Realtors® in each area discuss their roles when inventory gets low and bidding gets crazy. We’ll come back with insight from other parts of the country--where real estate agents in our Texas and Massachusetts territories report on how they're helpnig clients succeed in an increasingly competetive market--in Part 2 of this series.
It’s Not Always More Money that Makes an Offer Stand Out
Bryan Sweeley, Zip Realtor ® in California’s Silicon Valley notes that his market is “crazy” right now. When it comes to bidding, he says “It is all-out war.” But Bryan has still won 6 deals in the last 8 weeks, in each case multiple offer situations, but his winning clients didn’t necessarily have the highest bid of the bunch. Other things come into play aside from money. For example:
- The buyer’s emotional commitment to this house
- Financial stability (pre-approval comes into play here)
- The buyer’s agent’s reputation and reliability
- The relationship of buyer’s and seller’s agents—if these people know and trust each other, that trust goes a long way with an offer
- How complete and correct the offer is when it is presented to the seller
Personal Relationships and Real Estate
Bryan stresses that the personal relationship he’s developed with so many fellow agents is paramount in successful offers. Listing agents play a significant influencer/advisor rule with the seller in deciding which offer to accept.
This communication also helps buyers get insider information: “In fast moving markets, I call the other agents with pending sales to find out how many offers, which also tells me how many competing buyers. Getting closed sales info and getting the other agents to talk is not something most buyers can do on their own.”
Becky Gee, Zip Realtor® in Portland, OR agrees that the human touch often wins out over bids that come from semi-anonymous buyers and buyers’ agents—even if those latter buyers are offering more money.
“As a buyer's agent in this low inventory market, I know it is extremely important to have a good working relationship with the listing agent. By asking the right questions, you can find out what the seller's motivation, time-line and experience are in regards to the transaction, which can help determine what it will take to get your offer accepted.
One recent example I had with some buyers was on a house in the super popular Clinton neighborhood. We were the first ones through the house the day it came on the market, wrote an offer immediately following the showing and after I had a conversation with the listing agent about what their perfect offer would look like. We wrote that perfect offer along with a note explaining to the sellers why this was my buyers perfect home. Even though our offer was similar to the other three offers that came in the same day, the sellers appreciated and felt a connection to my buyers from their personal note.”
Helping You Know How Much to Bid
Bryan also points out that experienced agents know how to adjust offers monetarily in competitive markets, and since Bryan can call the listing agent to find out how many bids there are, he’s able to produce some fairly logical math for his clients. “Roughly, the price [of a multiple-bid winning home for sale] will be about 1% over list for each multiple offer: 5 offers, 3-4% over list.”
Becky too knows that an experienced agent has an advantage over a new buyer in analyzing the market. Prices change quickly when the market heats up like it is now. “Having an agent who represents you in this market is key...especially one who knows the neighborhood and what homes are truly selling for; not just what they are listed for.”
The Presentation of Your Offer
In multiple offer situations, the listing agents tend to request us to email offers as PDFs. That makes it even more important that everything is complete and picture perfect. The listing agent is going to spread out the offers in front of the seller and give a summary overview of each one.
- Did the agent and buyers take the time to sign-off on all the disclosures?
- Are all the proper forms complete?
- Are the terms complete, negating the need to counter to correct the terms?
- Is the loan pre-approval letter and bank statements showing proof of funds included?
- Is there a professional cover letter that shows you are working with a professional buyer's agent?
Lacking in any of these areas, Bryan says, “at least half will be discarded immediately."
In Hot Markets, Don't Get Burned
Given that buyers don’t usually have to even pay for the support they get from their agents, Bryan doesn’t see why anyone would try their luck in a competitive market without a Realtor®. “The issue for Buyers is not whether to go it alone. The issue is how to find a Realtor that has the experience, skill and personality to win over the listing agent and the seller.”
Both Becky and Bryan, though they represent different markets, sum up their role in a similar fashion: “Your Realtor® is a key competitive weapon against the other buyers.” And when the competition gets tough, you want all the weapons you can get in the battle to win your perfect home.
Check back for Part 2 of this series, for insight from other parts of the nation as historically low inventory continues to drive the market (slightly crazy).