In this insanely overheated Silicon Valley real estate market, would-be home buyers are extending themselves substantially to be the winner who gets the property in multiple offer bidding wars. A few who’ve lost out repeatedly may even “spike” the price to make sure of success. Sometimes, though, the fantastic contract that is so well written from buyers who seem so ardent about getting the house or condo ends up looking more like a mirage in the desert in the days following contract acceptance. Think of it like a morning after hangover for some of them as it hits them that they were willing to pay more or have fewer protections – or both – than perhaps a dozen other buyers. It’s the “what have I done?” panic. Sometimes people at work or in their lives tell them it was a big mistake. So some get cold feet and back out.
Understanding this as a possible nightmarish reality, home sellers in the San Jose – Los Gatos area (and their listing agents) frequently look for the offer and buyers who seem “most solid” and most likely to close. It’s often referred to as security. In other words, the seller wants to know that if you get into contract to purchase the home, you will close on the transaction and neither renegotiate a week or two later or walk. They don’t want a bumpy ride to closing.
In this blog, we’ve discussed a lot of tips for success in multiple offer situations: having cash, a strong pre-approval, asking questions before writing the offer, contingencies, time frames, rent backs and perks for the seller have all been touched on. But we haven’t talked much about the importance the buyer’s agent makes. Let’s talk about it.
Why the buyer’s agent matters so much in multiple offer situations
If a seller and listing agent have a choice in which buyers and offer to work with, as mentioned above, they want the sense of security that the transaction will go to closing as smoothly as possible. The relationship between the listing agent (and sellers) and potential selling agent (buyer’s agent and buyers) begins before the offer is accepted, of course. It’s a little like a courtship. If the dating is bad, who’d want to commit to a marriage? So too with this pre-sale professional dance. Some real estate professionals make mistakes that which damage their clients’ chances of winning in multiple offers. Others don’t.
Beyond mistakes, though, agent reputation can be a huge asset in winning (or losing) in multiples. In the Los Gatos and Saratoga area, there are a few real estate sales people – not very many, but a small handful – who are neither trusted nor liked by their colleagues. The real estate community will work with them, of course, but if it’s multiple offers, those folks certainly wouldn’t be first pick.
Conversely, when local agents know one another either personally, professionally, or by reputation as being good, honest, solid, experienced etc., it can literally open doors for those buyers if faced with multiple offers. The trusted agent will provide a type of security, or sense of security, that the listing agent wants to give to his or her seller.
What if your agent isn’t known?
A lot of times, a great buyer’s agent will attempt to find common ground between the buyer’s and listing agent, such as knowing some of the same people (when the offices are 10-20 miles apart, this can happen). “Please call her and ask about me!” The buyer’s agent may tell the listing agent. A lot of questions, trying to get to know the other agent a bit, may help find the common ground.
And what if there’s no common ground?
When it happens that there doesn’t seem to be much in common, then professionalism counts more than ever in establishing rapport and trust. Be respectful, communicate, no surprises, find out what the sellers want and need, put in a very complete package with the offer. Sometimes a cover letter from agent to agent can help immensely, too. When I know that the listing agent and I do not know each other at all, I will try to put him or her at ease by mentioning that I’ve been in the business for many years and will do my best, as will my clients, to make the escrow smooth and as surprise free as possible. A reassurance of intent can do a world of good toward providing that sense of security that listing agents and sellers want in our market madness.
It may surprise a lot of buyers that the highest bid isn’t always the winning bid. At times, the highest bid comes with less than desirable offer terms. At other times, the agents representing the buyers seem like they (not the buyer) could make for a bumpy escrow period – they could not seem to know what they are doing, appear unprofessional or perhaps not 100% honest. If those sorts of red flags pop up with the highest and strongest offer, the listing agent and seller will prefer to work with one with looks more reliable. Sometimes providing that sense of security to the seller can save buyers a lot of money as they win the house or townhouse or condominium without having to offer the largest purchase price. It’s surprising but very true.