Q We had been hunting for a property for almost a year and have failed to buy because whatever we want to purchase always has multiple offers. Do you have any advice for making this process easier?
A Know what you can and cannot control.
First, things you can’t control:
* Sellers and their agents who underprice the listing to encourage many people to make offers at a price much lower than they are actually willing to accept;
* A listing agency that has someone in their hip pocket that will outbid whatever you offer no matter how far over the listed price you offer;
* A seller or listing agent who reveals to a third party the substance of your offer in order to obtain an offer that is better than yours;
* If someone else pays more than you can reasonably afford;
* If someone else pays in excess of the reasonable fair-market value of the property;
* If the seller rejects your offer in favor of another buyer due to an emotional or irrational appeal made by the buyer’s agent or the buyer. Sellers have no obligation to treat the offer process by any standard of fairness. You may think it is unfair that the seller chose to make a counter offer to another buyer but not to your offer, however the seller is not obligated to make a counter offer if they feel it is in their interest not to. The seller generally has a duty of good faith and fair dealing once they sign a contract but not before;
* Market conditions that have led to a lack of inventory of homes in the price range below $1.6 million and a correspondent competitive environment for purchasing homes in the Bay Area.
Second, things you can control:
* Resist the urge to become overly emotional about the property you are offering on; emotion can lead to “irrational exuberance” as our outgoing Fed Chairman Alan Greenspan has been heard to say;
* Know all of the comparable sales prior to making the offer; do not rely solely on an agent’s opinion of what it will “go for.” Study the market so that you can be comfortable with your pricing decisions;
* Know your own limitations. Sometimes it pays to stretch, but it is painful to break;
* You will likely need to waive your right to a property condition contingency. Do as much advance homework and investigation as possible prior to writing an offer. If the information on the property seems incomplete or leads you to wonder about the possibility of major defects in the property you must resist the urge to take a chance;
* You will need to be financially qualified to buy the property at the offer price and be able to prove that ability to the seller. Failure to prove your financial worthiness is a death knell to your offer. If at all possible you should waive your financing contingency if you are comfortable that the property will appraise at the offer price and have the assurance in writing from your bank or mortgage broker that you are pre-approved for the loan amount you need;
* Make sure your agent is prepared to make a professional presentation to the seller of your offer with all completed contract documents, financing approvals and disclosures. A failure to complete disclosures or sign your offer could make the difference in the seller’s willingness to accept your offer. The more prepared you are, the more likely the seller is going to evaluate your offer as a serious one;
* Make sure your agent is in close communication and has a positive relationship with the seller’s agent. Listing agents often steer seller to deal with buyer’s agents that are professional, trustworthy and easy to work with;
* Make sure your agent presents your offer in the manner you have instructed. Don’t let your agent “sell your offer down the river” by indicating that you are “anxious” for a counter offer unless that is the strategy you have decided on. Consider if a creative offer that includes a price that increases relative to the other offers presented is a good idea. It is generally the best strategy to offer what you are willing to pay for the property and then wait to see the outcome. The multiple-offer situation is dynamic and until there is a closed escrow anything can happen;
* Never have regrets; there will always be another house for sale;
* Remember the age-old advice in negotiation: “He who cares least controls.” Know that even if you don’t get your offer accepted, that at least you were in control.