5 Ingredients of a Winning Offer
It’s not true that sellers will always accept the highest offer. Lately I have seen more sellers taking offers from buyers when they feel an emotional connection. I just closed my third listing in the last three months in which the seller did NOT accept the highest offer. My most recent experience of working with the sellers of 3625 19th Street is a case-in-point. My clients already knew that the market has appreciated substantially and they were going to have a large capital gain. They carefully reviewed the 4 offers that were submitted and they accepted a contingent offer that was $88,000 less than the highest offer, which was all cash and no contingencies!
Q: Why did the sellers accept a lower offer?
A: The sellers felt an affinity for the buyers. They fondly remembered how others helped them buy their home 26 year ago and they wanted to help the buyers! They did not feel any connection with the couple from Palo Alto who were paying all cash and wanted to buy the home for their 24 year old daughter.
Here are five tips for buyers to win in San Francisco’s highly competitive market.
- Be Pleasantly Memorable. Attend open houses multiple times and introduce yourself to the listing agent. Give them the name and phone number of your agent so that they can follow up. Smile and be vocal in your praise of the property without being effusive. No agent wants to hear someone spouting negative comments during the open house. Appear interested without bombarding the agent with too many questions. When the listing agent knows about you and your intentions, he or she can inform the seller, which increases your chance of winning in the end.
- Lean On Your Agent To Make the Listing Agent Their New Best Friend. Have your agent obtain the pre-sale disclosures. Review the disclosures and have the agent get answers to questions that you may have about the property. Become as informed as possible without pestering the listing agent. Your agent will ask the listing agent about potential competition and learn if there are any terms or special needs of the sellers that you can easily accommodate.
- Connect With The Seller. If possible, find a way to meet the sellers in person. Ask what they love about living in the home and let them show you! Tell them that you will be honored to live in their home and that you will cherish it. If you and your agent are not able to meet with the sellers, write a personal letter that expresses your heartfelt wishes of living in the home. Attach photos to your letter, if appropriate. Let them know how you would be a great addition to the neighborhood. Highlight what you have in common with the seller. Let them know if you attend the same church or if you share the same alma mater. Be creative! If you have mastered calligraphy, give them a handwritten note or card. You may share your grandmother’s secret fudge brownie recipe and include a few samples for them to munch on while they read your letter.
- Submit Your Best Offer The First Time. Write the best offer that you can, with the best price, terms and ease that you can muster. Don’t rely solely on your personal letter and don’t expect the seller to give you a counter offer. If you are not paying 100% cash, make sure that your financing has already been approved by the loan underwriter. The most serious buyers in San Francisco are doing their inspections BEFORE they make the offer, so that they can waive inspection contingencies. If you must have contingencies in the contract, try to make them as short as possible. Have your agent present the offer in person and bring the entire signed disclosure packet to the listing agent. This signals to the sellers that you are serious and it will be a smooth transaction if they choose you!
- Keep Learning. Accept that you may have to offer on several properties before you find the winning combination. Analyze each unsuccessful offer with your agent and discuss what you can adjust or do differently in the future. You are gaining knowledge and experience with each offer. Trust that there will always be another house!