The real estate market in many cities across America has come back to life. In some markets, buyers are getting outbid time and again by investors who can pay cash and close quickly. ‘Affordable’ is rapidly becoming unaffordable.
In multiple bid situations, you don’t know what other buyers are offering, and finding out that you lost a home for a few hundred or even thousand dollars can be disheartening.
Other than overpaying, what can a buyer do?
Write a letter
Time and again, I have seen buyers either have their bid accepted, or be given the opportunity to match the highest price, simply because they wrote a letter and included it with their offer.
Many sellers, especially people who have lived in their home for an extended period of time, want to see their home loved. Perhaps they raised their family there, and the walls are filled with happy, loving memories. They may have even built it themselves.
The neighborhood is most likely filled with friends, and they want to maintain their community.
Whatever their motivation, people get extremely attached to their home and want to see it treated the same way they treated it.
Having a developer come in and make huge changes to their property, necessary or not, may make them sad. ‘This house was good enough for me.’ For many people, this is the most valuable thing they own, and to have someone come in and say this is all wrong can feel like a personal attack.
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Make it personal
Start the letter off right by addressing it to their names, not ‘Dear Seller.’ The name of the owner can usually be found in the documents that your real estate agent has access to. Ask your agent to help you.
My friend Laura won her bid by taking note of items around the home, and mentioning things they had in common with the seller. They noticed a cat bed in the house, and high-end bicycles in the garage. In their letter, they mentioned their own feline friends, and how much they love cycling.
I’m not suggesting you stalk the sellers, or spend an inordinate amount of time in their home looking for things you have in common. If you get too personal, you may creep them out and lose the bid, just because they think you’re weird. You’re just trying to make a connection, to give them a reason to want to sell to you.
Include a picture
My friend Jenny was given the opportunity to match the highest offer by including a picture of her (with her very pregnant belly sticking out) and her husband, plus their dogs. She told the sellers how much she was looking forward to raising her baby in their home, and that her dogs would love playing in the large backyard.
It didn’t hurt that she had noticed the seller was a dog owner. At the closing table, the seller told her the reason she was given the opportunity to match the highest offer was because she included a picture of her dog.
Sing the praises of the house
I have seen investors come in and verbally trash the house, in the hopes they can get the seller to think it isn’t worth what they are asking for it. That may work for some people, but you can catch more flies with honey than vinegar. And in this market, when the seller has 9 other offers, they aren’t going to put much faith in your assessment.
Instead, tell them what you like about the property. Compliment them and be specific. ‘We love the blue glass tile in the master bathroom’ is a better way to show you like their house than ‘We love what you did with the place.’
Exploit unfair advantages
I am a licensed real estate agent, and I currently have a client who is looking for a home in the hot hot hot price range in our town. I have advised her to write a letter, just like I do with all my clients. But she has a slightly unfair advantage – her husband.
Joe is a decorated Iraq War Veteran. He served in the Marines, and has a very military air about him. I have encouraged her to include this in her letter, because this may be the tipping point for a seller. You never know what is going to give you the advantage, and in a market so hot, you have to use everything you’ve got.
I’m not recommending you tell anything that isn’t true. Don’t talk about your military service, unless you HAVE military service. Don’t make up children or pets. Don’t pretend to share a hobby.
Highest and best
The absolute best way to win the bid is to make the best offer. Offering the most money, with the fewest contingencies and inspections gives the seller confidence that the sale will go through. Writing a letter won’t trump a much better offer, but it can get your foot in the door to start negotiating with just the seller, instead of competing against all those other buyers right from the start.
I know five people who have been outbid time and again, and then take this advice, only to have their next offer accepted.
All’s fair in love, war and real estate.