Multiple offers are here and the bidding wars are back! This is great for sellers, not so great for buyers. From Downtown San Diego Condos to Pacific Beach town-homes and La Jolla homes, the competition has really heated up.
This can be attributed to three main drivers:
Interest rates remain low for home loans, the inventory of real estate currently listed for sale is minimal at best, and prices remain very affordable, especially relative to their peaks in 2007. The end result is a lot of buyers wanting to buy coupled with very little options to choose from. It is not unusual right now to see a properly positioned home or condo receive between 12 – 30 offers!
Not to despair, multiple offer bidding wars can and are won on a daily basis. These are my suggestions below. You do not need to use all 12 but pick a few and you will be in escrow on your Downtown San Diego or Coastal home before you know it.
1) Offer Asking Price or More – If the home or condo is priced right, offer by 3 to 10% more.
2) Find Out the Seller’s Needs – A specific title company? A rent back? A longer escrow? This can go a long way in certain situations. Especially in Downtown San Diego were many condos are second homes or investment properties.
3) Read All Existing Inspections and Reports – There may be a chance to remove certain contingencies here. After reading these seller documents, sign, acknowledge date, and include a receipt for reports form. The less red tape for the seller, the better your offer will look.
4) Pay for Seller’s Fees – Such as Escrow Fees, Natural Hazards Disclosure, Pest Inspections, Smoke Detectors, Water Heater Bracing, and Carbon Monoxide Detector. Refrain from asking for a Home Warranty.
5) Write a Personalized Letter to the Seller – Introduce yourself and your family. Tell the seller why you like the house. Maybe even include a picture or a short video clip.
6) Include all Pre-Approval Forms – Such as the Pre-Approval Letter (a full DU Approval is preferred), source of Down Payment and Closing Costs funds. Demand your lender to call the Listing Agent to tell them what a great buyer you are! For Downtown San Diego condos, have your lender assure the listing agent they can finance the particular building. This is a big tip, circle or highlight it!
7) Increase Your Deposit Amount – Increase your deposit by 10 or 20% as a good faith deposit and sign the liquidated damages provision. Even in the unlikely event escrow had to be canceled after your contingency period is over, you’re capped at 3% unless you documentation stating otherwise. This has been an especially powerful technique in the La Jolla coastal market.
8) Confirm Physical State or Purchase As-Is – If the seller is going to look at offers on a certain day, do the physical inspection, then write the offer without the Physical Inspection Contingency. Or potentially write the offer to purchase “as-is”. This simply means if an unforeseen inspection item does arise, you either remedy the item(s) as the purchaser or you may decide to walk as your contingencies are still in place.
9) Write Without Appraisal – This is powerful. If you have 20% down, and you have some extra cash in the bank, write the offer without the Appraisal Contingency. The seller is assured you will move forward even if the house does not appraise.
10) Buy For Cash – If you have the cash, write the offer for cash! Get your loan during the Escrow period, or after Escrow is closed. Although keep in mind over 30% of real estate purchases are for cash so cash alone does not eliminate your competition.
11) Fix All Errors on Contracts – This seems like a no-brainer but not to be taken lightly. Check spelling, no cross outs, clean it up! The contract must look like a professional put it together. A listing agent will see a contract with errors and mistakes and think this is a sign of things to come and a rocky escrow at best.
12) Meet With the Sellers – This is not always possible but a huge advantage if the option is there. If your offer is close to another offer, the sellers will have made a connection with you and may choose you
