Below is an article from the California Association of Realtors about managing a multiple offer scenario and how to get a deal accepted.
Article from California Association of Realtors, California Real Estate Magazine, September 2009
How to win a bidding war
By Marcie Geffner
It’s no secret that a strong purchase offer−a high price, all-cash, no contingencies−can help to win the day when buyers get into a multiple-offer situation. But what many REALTORS® may not realize is that their own behavior also can make a huge difference in the outcome even if their buyer’s offer isn’t the best of the bunch. Agents who are well prepared, professional, and positive can do a great service for both the buyers they represent and themselves.
Linnette Edwards, an associate broker with Prudential Highland Partners in Piedmont, has had plenty of experience with multiple-offer situations. She says it’s not unusual for her to write up at least one buyer’s offer a day in a streak. She once wrote three offers for buyers in just one day, and many of her buyers’ offers come out on top.
Her winning strategy includes four secrets:
1. Put on the charm. The buyer’s agent needs to create a rapport with the listing agent just as the buyer needs to establish a connection with the seller, Edwards says. Buyer’s agents should signal to the listing agents that they will be professional and easy to work with from soup to nuts. To send that signal, the buyer’s agent should call the listing agent and try to get to know him or her, but keep the conversation short and on point.
“Don’t come across as a high-maintenance buyer’s agent,” Edwards warns. “Ask questions to assess the competition, but don’t get too detailed about issues with the house because all houses have issues.”
2. Manage buyers’ expectations. Buyers who are well prepared for multiple-offer situations won’t hesitate when it’s time to make an offer, Edwards says. That preparation doesn’t happen in a vacuum; rather, it takes a concerted effort on the part of the agent. Discuss multiple-offer strategies with buyers and educate them about the offer process. Unless you’re a brand-new agent who needs to learn the ropes, don’t write offers for buyers who can’t possibly win a competitive situation.
3. Assess the competition. Perhaps the most important part of the strategy is a solid assessment of the other offers. While buyer’s agents generally aren’t told specifics, it’s still possible to suss out the competition in a conversation with the listing agent. Here are some questions Edwards asks:
> How many offers have been received?
> How many disclosure packages have been distributed?
> How many other agents have inquired about the home or said they intend to write an offer?
> What will it take for the buyer to get his or her offer accepted?
> Would it be worthwhile for the buyer to offer X dollars?
Edwards also checks in with agents who represented buyers and sellers in other recent multiple-offer situations on comparable homes.
“I call them to get a feel for how much those properties sold for. They may not tell you directly, but they will give you an idea of how high [the bidding] went, and those buyers who lost on that pending [sale] will be bidding,” she says.
4. Pull together a complete offer. A strong offer shines in presentation as well as terms, Edwards explains. Her offer package includes a cover letter, a “love letter” from the buyer about why they want to purchase the home, a loan preapproval letter, and, sometimes, the first page of the buyer’s credit report. The cover letter highlights the strongest aspects of the offer and summarizes why the seller should consider it.
“When possible, present [the offer] in person,” she suggests, “and follow up with the agent over the phone at a minimum. You’d be surprised how many people who write [an offer] on my listings never call to follow up.”
Last Buyer Standing Wins
Carla Lemon-Wilcoxen, a sales associate who handles mostly short-sale listings at RE/MAX Gold in Yuba City, is also quite familiar with multiple-offer situations.
“We continue to accept offers throughout the process, so we almost always have multiple offers on the properties,” she says.
Even in a short sale, it’s still important for the buyer’s agent to get to know the listing agent and demonstrate an ability to represent the buyer. If the two agents have worked together in the past, an introduction isn’t necessary, but if the buyer’s agent doesn’t know the listing agent, a friendly telephone call can pave the way for the offer to receive a warm reception, Lemon-Wilcoxen says.
“Take a little extra time to let the listing agent know a little about you and that you will be sending an offer. Be professional, explain the buyer’s situation a little bit, and give [the listing agent] a heads up,” she suggests.
The buyer’s agent also should become educated about the short-sale process, which can take weeks or months while the lender considers the various options and offers. Agents who aren’t familiar with the process should “surround themselves with knowledgeable people,” she says. Ask questions, and explain the process to the buyer as well.
Often, Lemon-Wilcoxen says, “the last buyer standing” will be able to purchase the property simply because the others have fallen by the wayside as the process has dragged on. That means both the buyer and the buyer’s agent need to be patient.
Positive, Friendly, Helpful
Erik Weichelt, a REALTOR® who lists bank-owned (REO) homes at Weichert REALTORS ® -Elite in San Diego, says such homes can attract as many as 25 offers. He’s in a position to know since, he says, his team fields as many as 70 offers a day on hundreds of postforeclosure homes.
Weichelt says banks would prefer to receive just one solid full-priced offer, rather than multiple offers, because a bidding war “makes their life substantially more difficult” and “dealing with that many offers is not fun.” And yet, multiple offers are common. That means buyer’s agents must be prepared for such situations.
Charm alone may not go far with Weichelt, whose rules and recommendations are brief and to the point: “Be positive, helpful, and friendly,” he says, and “make sure the offer is clear and concise.” The offer should be complete, the loan preapproval should match the offer price, and the offer should be turned in on time. If the bank instructs buyers to submit a highest and best offer within 24 hours, “you can’t wait three days” and then submit an offer, he warns.
Agents who aren’t familiar with the REO process are encouraged to ask questions about what they need to do to submit an offer, Weichelt adds.
“In my office, we help people. [We say] ‘Please make sure the offer is clean.’ We don’t keep this a secret; we want to get the property sold,” he says.
And here’s one more tip from Weichelt: The buyer’s agent should be sure to put his or her own name and contact information on a cover sheet, so the listing agent will know how to get in touch.
“You’d be surprised,” he says, “how many offers I get that I don’t know who wrote them.”
Marcie Geffner is a freelance real estate reporter
Article from California Association of Realtors, California Real Estate Magazine, September 2009
