When the Covid-19 pandemic hit, there was speculation the red hot housing market would freeze. However, despite a slight cool early on, the market heated back up and by May 2020, it was, once again, on fire.
But a red hot market like the one in the Bay Area – with low inventory and homes often selling before they even are officially on the market – can leave potential home buyers missing out and frustrated.
“This past year, the MLS has included a ‘coming soon’ feature,” said Liz Venema, owner of Venema Homes Real Estate Team, which serves buyers and sellers in the East Bay. “It’s a great tool to see what’s coming. Buyers can see coming soon homes. I have agents calling me and buyers, without agents, asking if they can look at a home before it hits the market.”
Venema said preemptive offers are often made and must be noted for 24 hours within the MLS to give all buyers the opportunity to place an offer.
Making an offer that stands out, however, remains the biggest obstacle to purchasing in today’s market. A strong offer greatly increases the probability a seller will accept a buyer’s proposal. Price remains the most attractive aspect of an offer, and Venema and her team suggest an offer over the asking price, with the percentage over asking based on recent sales and other factors.
But there are a handful of other components that can raise the status of a lesser offer over one with higher value.
“An all cash offer or short escrow close,” said Venema. “Escrow averages 30 days so anything else shorter is attractive to the seller -- especially if the home is vacant, it is very important. We had one close in seven days and the seller took our offer out of nine offers, even though one was $15,000 higher than ours.”
According to Venema, other ways to make an offer pop are less obvious.
“The buyer can show a large proof of funds for a down payment and other assets. They can also accept the seller’s escrow company, pay for escrow and title insurance or pay other seller fees such as home warranty and county transfer tax fees. Basically, covering any seller fees will enhance an offer.”
Pre-approval and, especially, a conditionally approved loan are other ways to have an offer entertained.
Regardless of a buyer’s offer, Venema said agents are required to provide a seller with every offer presented. She said the best practice is to put in your highest and best offer the first time, but some buyers don’t.
“We have had many (offers) be included in a counter offer,” Venema said, “and the fifth offer -- that was the lowest -- all of a sudden magically comes back in as the highest offer and is accepted by the sellers.”
Previously, buyers would present personal stories to appeal to sellers, but that is now a Fair Housing violation, Venema said, noting the new rule was implemented to protect buyers from possible discrimination. She also said it’s the buyer’s agent’s responsibility to advise their clients to not include any correspondence and personal information.
Without the ability to share stories, getting details on what the seller wants requires a proactive agent and will greatly increase the chance of a seller accepting a buyer’s offer.
“The buyer’s agent should call the listing agent prior to submitting the offer,” said Venema. “They need to find out what the seller is looking for. Do they need rent-back? Do they want the home sold as-is?
“The buyer’s agent should build rapport with the list agent,” she continued. “The listing agent will want to know that the buyer’s agent is easy to communicate with, is experienced and has a team that supports them. Having systems in place is a must.”
Venema added that the agent might share the buyer’s timing, preapproval letter and other facts regarding the buyer with the listing agent.
“The old saying ‘knowledge is power’ is very true,” Venema said, “but it must be facts on the buyer and what makes them a strong candidate for the home. I also appreciate it when the lender calls me directly so I can vet the buyer. This really helps when I meet with the sellers and can prepare them on each buyer’s financial strength.”