Making an Offer: 5 Mistakes to Avoid
I had to post this article the moment I read it. So timely – and allow me to add my Silicon Valley Realtor 2 cents in italics.
In competitive housing markets across the country, making an offer that sticks has become increasingly difficult. Ensure your client doesn’t make the process even tougher by succumbing to one of these common mistakes.
The Caton Team works with Sellers and Buyers up and down the San Francisco Peninsula. So we know – as a Seller’s Realtor – what we want to see in an offer and supporting documents which only aids us when we represent Buyers.
“Time kills deals,” says Andrew Sandholm of BOND New York Properties in New York. “Dragging your feet means you could wind up paying more in a bidding war situation or missing out on the property altogether.” Buyers need to be ready with their paperwork, such as bank statements, a pre-approval letter, and documents supporting proof of funds, from the day they begin house-hunting mode. That way they can pounce quickly with an offer when they do find a home they like.
My goodness, this is the truth. In fact, in order to ensure my Buyers a smoother experience, I no longer show homes until the Buyer has been pre-approved. A Buyer MUST KNOW their own budget, how much they can afford, how much their lives cost BEFORE they start house hunting. Once we find a home, we must focus on THAT HOME and the disclosures package. When we sit down to write an offer, that is NOT the time to discuss budget. That’s the time to discuss the home, condition, inspections, disclosures and how much it is worth to you. To be frank – to be a successful Buyer in the Silicon Valley – a Buyer should have Under Writer Approval. That is what it takes to be a strong and successful Buyer in the Silicon Valley Real Estate Market. Curious what that means – give The Caton Team a call.
Making an offer for their preapproved amount
Smart buyers are getting preapproved to show a seller they’re financially able to purchase a home. However, Chuck Silverston, principal at Unlimited Sotheby’s International Realty in Brookline, Mass., warns buyers against using that document to come up with an offer amount.
“Many buyers come in with a preapproval for the exact offer price, but when you’re competing against other offers, including cash offers, you want to show financial strength,” Silverston says. “An exact preapproval could make a listing agent nervous because not only does the buyer not have any wiggle room to negotiate, but they might no longer qualify if interest rates rise.”
There was a time in our Real Estate Market that we would customize each lender approval letter with the offer price. It was a a way of not showing all your cards at once. For instance, you are approved for $3 million but your letter and offer says $2 million. Well when the Sellers Realtor lines up the offers and tries to determine financial strength – having no wiggle room in your lender letter will diminish your financial strength. And sadly, though my lender calls on behalf of my Buyers to each offer we write – many lenders do not call. I know this as my phone is radio silent on offer day – too bad more lenders don’t step up to the plate and offer wonderful customer service. But that is a whole other blog!
Submitting a lowball offer
Lowballing a seller often backfires, particularly in a seller’s market. “A lowball offer that isn’t backed up with math or comparable sales data is disrespectful and could turn off the seller and possibly mean you will miss out on the property completely,” Sandholm says.
From time to time, as a Seller’s Realtor – we’ll get these mysterious faxed in offers. (I joke, they are not faxed anymore) but you get my gist. They are awful offers, terribly written, and low. Too low. Insultingly low. As a Seller – don’t get offended. As a professional Realtor – The Caton Team knows how to handle these delicate situations.
Waiving inspection contingencies
“I don’t care whether it’s new construction or even your mom’s house you’re buying from her – get it inspected,” urges Joshua Jarvis of Jarvis Team Realty in Duluth, Ga. Further, if you waive the inspection contingency in your offer, you may lose the earnest money if you later back out of the deal.
Well, if you are a Buyer in the Silicon Valley – and you’ve written more than one offer – you have learned the hard way that contingencies are deal killers in a sellers market. If a Buyer is in a multiple offer situation – any contingency can and probably will throw you to the bottom of the stack. HOWEVER, The Caton Team understands what a Seller wants in their offer and we understand what the Buyer needs. The Caton Team has a great Buyer Strategy when these critical terms are at stake. Come sit down with us and we’ll discuss our distinctive Buying in Silicon Valley strategy.
Not presenting yourself well enough
In a seller’s market, buyers need to take steps to make sure they look good in the eyes of the seller. “In today’s highly competitive environment, the listing agent is trying to determine which buyer will be the easiest to deal with,” Silverston says. Buyers may want to avoid pointing out every defect, making nitpicky queries, or questioning the seller’s tastes.
“Basically buyers who act less than enthusiastic will see themselves at a competitive disadvantage when sellers are comparing multiple offers,” he says.
“The easiest to deal with”… Did you catch that phrase? When the Caton Team works with Sellers and reviews offers – we are looking for the best offer, with the best terms that WILL CLOSE ESCROW!. Taking a great – high offer – no contingencies blah blah blah – won’t matter a hill of beans if it does not close escrow.
What sets The Caton Team apart from other Realtors is our level of hustle. I don’t know another word for what I do when I represent a Buyer. I hustle. Ask my clients. Read my YELP reviews. I work hard. Finding a home is no longer my principle job as a Realtor. I know that sounds funny but with the internet and all the listings available online 24/7 – finding the home has become the Buyers Journey. But GETTING THE HOME – is what I do best. The Caton Team has exceptional negotiating skills. It starts with the first call to our fellow Realtor when we find the home, through the disclosure review, through the offer writing, through the offer presenting. Yes, The Caton Team still presents their offers. When possible we take the time to present the offer to the Sellers Agent, we ask questions before, during and after. If you have ever worked with us – you will know and see the difference in our level of service. Any agent can find a home, but The Caton Team will guide you on how to get the home YOU WANT!
What does that mean? Well you know – come sit down with The Caton Team and we’ll chat about it.
How can The Caton Team help you?
Thank you for read,
I read this article at: http://realtormag.realtor.org/daily-news/2017/05/10/making-offer-5-mistakes-avoid?om_rid=AACmlZ&om_mid=_BZE0AQB9bqaWV2&om_ntype=RMODaily
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