How to prepare yourself for San Diego’s hottest market as a buyer
Written by Heather Wendlandt
I just wrapped up a successful closing for one of my fabulous buyer clients, and am now in the midst of negotiating 7 offers on a listing in this crazy market. I thought it would be a great idea to share some words of wisdom for those buyers out there during this time with the goal of getting their offer chosen.
1.) Who you work with: The number one advice I have is make sure you pick a savvy agent. Right now, buyer’s agents are truly earning their commissions - it’s harder to find homes due to low inventory, and even if you find a home, you will be competing with 3 to 15 other offers.
By partnering with a savvy agent who has relationships in the industry and knows the area inside and out, you will most likely have a better chance of getting the deal done. The listing agent has great power in today’s market, as sellers often seek their guidance in choosing the winning offer. If the listing agent thinks highly of a particular agent, that can often help.
As you may or may not know, there are a lot of pitfalls and roadblocks that can come up during the complex Escrow process, and having two agents that work well together and trust each other is extremely important, so much that it can be a major deciding factor.
2.)Forget Comps: In this market, I would just throw out analyzing the “comps” when preparing to put an offer on a home. Remember comps are 30 to 90 days old anyhow, and every month in today’s market just gets hotter! Also, it just doesn’t matter if the comps show a property is worth $730K, but you get 7 offers at $770K; I would argue that the Comps are outdated and less relevant.
The MARKET decides and dictates what the value of a home will bring. So, if you feel you are already going in at the high end of the asking price and there are 7 other offers, I wouldn’t “miss” out because you think the “comps” are not justifying the price of the home. It’s not the right way to think about this market, since homes are getting bid up so high due to lack of supply and increase in demand. The better question is does the home serve your needs right now and will you be happy living there. That being said, you may be asked to sign an appraisal waiver, which means that, should a home appraise at a lower value than the contract price, you agree to bring forth any additional funds to bridge the gap.
3.) Dear Homeowner Letters: This one is a controversial topic of interest among REALTORS® these days due to potential Fair Housing violations. In case you are not aware, "Dear Homeowner" or "love letters" are letters buyers write to the sellers in hopes of helping their offer get accepted. The issue these days is that some of these letters include pictures of the buyers and can introduce unfair discrimination unconsciously by the sellers when choosing their favorite offer. While I agree that these letters can certainly reveal too much personal information, especially if photos of the family are included, you can write what you love about the home and about your financial strength in closing the deal in order to help your offer be among the top selected by the sellers. With advice and guidance from your savvy REALTOR®, you can ensure that your letters are done in a way that is careful, yet convincing.
4.) Communication: This particular topic relates to my first point about choosing your Agent carefully, but what I would ask yourself when choosing an Agent to represent you is the following: Is my Agent a strong communicator? Are they likeable? Time and again, I see Agents out there that just are terrible communicators! They don’t understand that to help their buyers succeed, they need to build a relationship with the Listing Agent.
You can’t just show a home and submit an offer in today’s market. The Buyer’s Agent has to call and text and be proactive in terms of building a rapport with the Listing Agent and finding out what is important to the sellers. They also need to be story-tellers... who can tell the most compelling story about their buyers and convey that to the Listing Agent and Sellers. It’s a crucial step that I think is missed with a ton of agents out there.
5.) The Offer: The final piece of the puzzle is your offer. A lot of times, it does come down to who is offering the most money and best terms. This becomes even more important in a multiple offer scenario, so prepare yourself now. The listing may be for $750K, but in today’s market that could actually mean $780K after the negotiation process is completed. If you find a home you like, you have to commit to it. Meaning, you have to be willing to put in the most money and best terms in order to get it. Or, like I always say, “Be in it to win it”.
Go in strong, and keep your position. The ones who go in the lowest in my opinion off the bat get dismissed by sellers as being too low; the seller is not going to think about their offer compared to other’s. So, if you are the type that likes to be cautious and enter offers on the low end, I would rethink that strategy in today’s market, IF, you actually want to win at the game and get the home you want.
I hope this article helps you rethink your buying strategies in today’s market. For more tips and strategies, reach out to us, as we love to help our client’s win at this game called “Real Estate”!