I just spoke to a very upset buyer (not with me. She’s never met me before. She found me on one of my YouTube videos). She was upset with what she and her husband had been going through for the last year with this aggressive seller’s market. They put in several offers, all been getting rejected. She is so frustrated, about to give up. I know you’ve heard this story before. However, what you don’t know is the buying strategies I just shared with her, which I’m going to do right now. It’s all coming up. Stay tuned.
Hi, I’m Warren Oberholser. I’m a realtor in the East Bay Tri-Valley area in Northern California. My goal is to help both buyers and sellers get maximum results for one of their biggest investments, their home.
Okay, back to my story. As I explained in the beginning, the woman I just got off the phone with was quite frustrated with making several failed attempts to purchase a home. After listening to her for a bit, I could hear there may be a few other reasons besides our low inventory that are preventing her from getting her offer accepted.
They range from communication to negotiating. So after getting off the phone, I put together a three-step strategy to help you better navigate through the home buying process. Hopefully, this will help you increase your chances of getting your offer accepted.
Now, if you’re a new agent, you may find this also helps. I can tell you when I first got my license, I needed all the help I could get. So hopefully this will help you better serve your clients.
So here is my three-step strategy to get your offer accepted.
Step number one: Communicate with the listing agent.
The buyer’s agent should reach out to the listing agent first, before submitting their buyer’s offer. Now, this can be done by text, phone, or email. When I’m representing a buyer, I always call the listing agent on the property they’re interested in. Now, why is this important?
- One, it establishes rapport.
- Two, the listing agent may share information they normally would not put in the agent confidential area in the MLS (multiple listing service).
- Three, they may tell the buyer’s agent how many offers they’ve received so far and which one is the strongest.
- Four, if there’s an offer due date, the listing agent may tell the buyer’s agent the seller is considering accepting an offer they just received and may not wait until the offer due date.
The bottom line, this is a great opportunity to get in good favor with the listing agent and hopefully learn valuable information. Also, after hearing this information, the buyer may not be interested in moving forward with submitting an offer or the listing agent may tell the buyer’s agent, “Hey, the seller’s already accepted an offer, I just haven’t updated the MLS yet.” This can save time and stress for both the buyer and the buyer’s agent and this way they can move forward to the next property.
Step number two: Consider all properties to purchase, not just the new listings.
You need to look at everything, including properties that fell out of contract and are considered back on the market and properties that are priced too high.
Properties that are priced too high are my favorites.
- One, you probably don’t have any competition on a property that’s overpriced.
- Two, if the seller’s really interested in selling, then they’ll be open to negotiating.
Now, if your purchase agreement is contingent on selling your home first, overpriced homes are an excellent opportunity. If they negotiate on a property that’s overpriced, they have leverage here.
Now the buyer’s agent is going to handle the communication with the listing agent the same way they would if it’s a new property that just came on the market. They’ll reach out to them, find out what the story is so they can see what’s going on.
Another area to look at is recent expires and withdrawn listings.
When you see a property that you’re interested in just goes off the market, have your buyer’s agent reach out to the listing agent to see if the seller would be interested in accepting an offer now. I can tell you I’ve been able to get several buyers into contract this way, even in an aggressive sellers market like we’re experiencing right now.
Another type of property to look at is the oddball property.
This is a property that was either built or remodeled in such a way that it limits interested buyers. For example, it could be a 2,000 square foot home but only have one or two bedrooms. If the floor plan was originally three bedrooms and was converted to a one enormous master bedroom, a contractor can usually just go in and add the missing walls back with some finishing details like carpet and paint for a marginal expense and time. If this is a custom-built home, sometimes the seller will provide as disclosure material the contractor’s original blueprints.
This can help the buyer assess if the repairs they want to have performed are within reason. For both scenarios, I highly recommend you consult with a licensed contractor.
The last property to look at is one that has some kind of issue.
Now this can be a property that needs a new roof, has section one issues, foundation problems, or has been repaired out of a claim filed by the current or previous homeowner, which has now caused the homeowner’s insurance premium to go up. Regarding repairs, the buyer agents should be able to negotiate from the seller to have them perform the work prior to closing or some kind of credit or reduction in price or possibly both.
Number three: Be ready to submit a strong offer.
A strong offer can mean a few things. The most obvious, a good price in terms.
Let’s start with terms. The two key areas to cover here are how are you going to pay for the property, in other words, will it be cash or financing? And two, what is the length of your contingency periods?
In a California residential purchase agreement, there are three basic buyer contingency periods.
For California residential purchase agreement, the standard time for investigation and appraisal is 17 days. For a loan, it’s 21 days.
The basic purpose or function of a buyer’s contingency is a clause in the purchase agreement to safeguard the buyer’s deposit.
So for example, if there’s something found in the inspection, the buyer can request the seller to correct it.
If there’s an issue with the appraisal, let’s say the appraisal comes in at less value than the buyer’s loan amount, the buyer can request another appraisal or possibly renegotiate with the seller on the purchase price.
For the loan contingency, if the buyer cannot qualify for a particular loan, they then can reapply for a different loan or a different type of loan.
This is providing, they still have contingencies in place. In other words, they haven’t been released. Now if the time period’s expired, the buyer can request an extension for more time from the seller.
If the seller will not allow the extension, the buyer then will have to decide if they’re comfortable with removing that contingency and moving forward with the purchase of the home, or they can cancel the contract and escrow will refund the buyer’s full deposit.
This is providing they still have a contingency in place, or in other words, they haven’t released all their contingencies.
Again, this is a basic overview for buyer contingencies. You should have a thorough discussion with your realtor, loan agent and if necessary, an attorney.
So you have a complete understanding of how they affect your situation and if it’s appropriate for you to shorten the time periods and possibly release them upfront.
What does the seller want to see regarding contingencies?
They prefer shorter timeframes and what they really want to see is contingencies released upfront.
Once the buyer’s offer has been submitted, I start the follow-up process. I always send the listing agent a follow-up text or I’ll call them to be on the lookout for the offer I just submitted. After I’ve submitted the buyer’s offer, the loan agent always sends a separate email just to introduce themselves and answer any questions a listing agent might have. This is really important because they may have overlooked your offer or it could have gone into their spam folder. Now, follow-up doesn’t mean I get to harass the listing agent, rather support them. Hopefully, by the time your offer has been submitted, the buyer’s agent has already developed some kind of good working relationship with the listing agent. Sometimes the listing agent can be overwhelmed with multiple offers.
I remember on one occasion where my buyer’s offer was competing with 20 others. The listing agent called me up and said:
“Well, it’s between your offer and another offer and yours isn’t the highest.” He then said, “I haven’t called the other agent yet because I want to ask you first the price that your offer is at, I don’t think it will appraise.”
My response to him was, “I agree. It probably won’t appraise. However, we’re not concerned because my buyer is putting down 35% and we’ve already released the appraisal contingency upfront.” After I told him that, there was a little hesitation or pause and he responded with, “Oh yeah, that’s right. I see it right here.” And he says, “Sorry, I missed that. I’ll discuss your offer with my seller and I’ll get right back to you.”
In an hour I received the ratified contract, which means the seller accepted my buyer’s offer and we were now pending.
So what happened here?
Let’s start with, why did the listing agent reach out to me first even if I didn’t have the highest offer? Probably the reason why the listing agent reached out to me first was we already established a good working relationship by communicating regularly. It’s also possible that the other offer, which was higher than ours had weaker financing terms than my buyer’s offer.
However, he was concerned that my buyer’s offer wouldn’t appraise. Now, remember, as I said, always help out the listing agent if you can, which is why I respectfully reminded him that my buyer was putting down 35% and had already released their appraisal contingency upfront.
What happens if you do all this and your offer doesn’t get accepted?
Here is what to do.
I always send a followup email to the listing agent stating something like, “it was a pleasure working with them“, even if it wasn’t. And in my email, I asked if they could kindly impart any information on how many offers they received and what were the terms and possibly offer price that they accepted. Now, why do I do this? Well, one, it helps the buyer assess if they’re being too conservative with their offer, price, and terms, and two, if we’re close, it’s possible that they’ll accept our offer if the primary offer backs out, as opposed to going back on the market and seeing what will happen next.
And yes, this has definitely happened with my buyers more than once.
This concludes my three-step strategy. As you can see, this video is intended for both the buyer and the buyer’s agent. If you’re a buyer, hopefully, this video helps you better understand the buying process and improves your communication with your agent. And if you’re a new agent, I hope this gives you some new tools so you can better serve your client. And as always, please feel free to reach out to me for any specific questions you might have.
I hope you enjoyed this article. Please let me know if you have any questions. Warren
Hello…I work with both buyers and sellers in the Tri-Valley area of Northern California. The Tri-Valley is comprised of 6 cities: Pleasanton, Livermore, Dublin, San Ramon, Danville, and Alamo. To better understand what each city has to offer, I have created a Pros and Cons video and BLOG for each – (Pros & Cons for Pleasanton, Pros & Cons for Livermore, Pros & Cons for Dublin, Pros & Cons for San Ramon, Pros & Cons for Danville and Pros & Cons for Alamo). If you are thinking about purchasing or selling a home, please reach out to me by text, phone, or email. If it is convenient, I can schedule a Zoom chat so we can discuss your home goals. Wishing you all the best on your home journey. Cheers!
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