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Bidding Wars

In today's multiple-offer market, both buyers and sellers can profit from some savvy advice.

September 06, 1998|MARCIE GEFFNER | SPECIAL TO THE TIMES

Thanks to today's strong real estate market, both home sellers and home buyers can expect to face multiple offer situations.

Sellers love multiple offers because they push up home prices. Buyers hate them for the same reason. Both sides wonder how they can come out ahead in these intense negotiations.

Here's some savvy advice to help you triumph whether you're trying to sell your home for top dollar or buying the home of your dreams.

ADVICE FOR BUYERS

Ways to Sweeten Your Purchase Offer

QUESTION: How can I make my offer more attractive to the sellers?

ANSWER: Offer the highest price you can. Get pre-approved, not just pre-qualified, for your mortgage and attach a copy of the pre-approval letter to your offer.

Make as large a down payment as you can and provide documentation showing the source of your down payment (e.g., a bank statement).

If your current home is in escrow, provide information about that transaction. Avoid unnecessary contingencies. (Waiving your inspection or financing contingency can make your offer attractive, but it's foolish.)

Tip: If the equity in your current home is the source of your down payment, make your offer contingent on obtaining financing, but not on the sale of your home.

If your home doesn't sell, you won't have the down payment and you'll be able to get out of the deal under the financing contingency, says Bob Stallings, broker/owner of Re/Max Real Estate Specialists in Long Beach.

Finally, include a personal note about why you want to buy the home. All else being equal, some sellers are influenced by these letters.

Why Lips Are Zipped Over Rejected Offers

Q: My offer didn't prevail in a multiple offer situation. Can I find out why?

A: Neither the sellers nor their agent is obligated to reveal any information about the decision.

As a courtesy, agents frequently will point out shortcomings of a rejected offer, but without disclosing details of the accepted offer.

"Until a transaction is closed, it's crucial that everything remain unknown in case that property has to come back on the market," explained Carole Geronsin, an agent with Prudential California Realty in Anaheim Hills.

"I just sold a property where [the buyer was making] a relocation transfer. A week and a half later, the company decided they were not going to transfer that executive. What would have happened if I had gone around saying, 'It sold for this amount'? You can't do that."

If It's Already in Escrow, It's Probably a Bad Bet

Q: Can I submit an offer on a home in escrow?

A: Yes, but agents say you would be wiser to move on to another home, particularly if there are formal backup offers. Even if your offer tops the accepted agreement, the sellers would have great difficulty canceling the escrow.

Dual Agency Depends on Ethical Agents

Q: I want to buy a home I saw during an open house. I don't have an agent. Can the seller's agent write my offer, or should I get another agent to represent me?

A: Any situation in which the buyer and seller are represented by the same agent or two agents in the same brokerage company is called a "dual agency." Dual agency is legal, if it is disclosed.

In a dual agency situation, the agent can't tell you how low a price the seller will accept, nor can they tell the seller how high a price you will pay.

If there are competing offers, the brokerage manager might be on hand when the dual agent presents the buyer's offer.

"More [companies] seem to be using that practice just to make sure everybody feels they've been dealt with fairly," said June Barlow, general counsel of the California Assn. of Realtors. "Technically, that broker still represents both parties and the price competition rules still apply."

Whether you should agree to a dual agency is a tougher call when there are multiple offers than it is when yours is the only offer.

"I've seen agents write two or three offers on one house," Stallings said. "If you are dealing with an honest, ethical real estate agent, you are going to be dealt with fairly and it's not going to be any different than having multiple offers from different agents."

Making Certain Your Bid Was Received

Q: My agent says the sellers are getting multiple offers and accepting them only by fax. How can we be certain my offer was considered?

A: The temptation to suppress a buyer's offer can arise when there is an in-house offer (one from a buyer who is represented by the seller's agent or another agent from the same brokerage) competing with an outside offer (one from a buyer represented by a different brokerage).

Even though an in-house offer nets a double commission for the brokerage (and sometimes the agent), the agent must present all outside offers to the seller.

Failure to present an offer is a very serious ethics violation. The only exception occurs when the seller specifically declines to consider an offer, perhaps because an offer is being negotiated or the home is already in escrow.

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