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An offer they can't refuse

If rival bidders are standing between you and your dream house, outmaneuver the competition with some shrewd strategies.

March 14, 2004|Wendy Jaffe | Special to The Times

Ask experienced real estate agents about the frequency of multiple offers in today's market and responses range from "at least 50%" to "every time if the home is under $600,000 and not overpriced." The combination of historically low interest rates and low inventory has made bidding wars the rule rather than the exception.

Buyers entering the multiple-offer fray, however, can increase their odds of being selected by a seller. Successful bidders attempt to connect with the seller on an emotional level, demonstrate that they have the financial resources to close escrow, eliminate unnecessary contingencies and are flexible and savvy enough to include deal points that address the seller's individual needs.

Unlike commercial real estate sales, where the bottom line is dollars, the sale of a home typically has a strong emotional component. Many homeowners, especially those who have lived in the same houses for years, care deeply about their home and neighbors.

"Transferring a home is like handing over an heirloom," said Roger Ewing, managing partner of Prudential California Realty in Calabasas. "Home buying is more of an emotional event than a business event."

Taking feelings into account worked for Helayne and Joe Levy, who purchased a home in Santa Monica. When the seller put her home of 55 years on the market last year for $925,000, it generated 33 offers, many from developers intending to tear down the dated house.

The Levys followed the advice of the seller's broker and made their best offer first. Three other parties offered even more than their $1.1-million bid. But a personal touch clinched the deal.

"I wrote a warm letter to the buyer telling her that I lived in the neighborhood and wanted to purchase her home for my family," Helayne Levy said. "I mentioned that I often walked my dog on her street and that I loved the house.

"While we were in escrow, she wrote me a letter mentioning the names of the stray cats that came by for snacks, and asked if I would continue to feed them. Clearly she was concerned about the future of her home and her neighborhood."

In a shift from the ground rules of the past, a potential buyer can get an edge by conveying that he or she cares about the house and presenting enough personal information so that the seller starts to care about the buyer.

"When it was a buyer's market, there was an unspoken rule that a buyer should not be overtly excited about a property because a seller might take advantage of that buyer's emotions in the negotiations," said Michelle Lavin Cohan of Re/Max Grand Central in Tarzana. "However in today's competitive market, the potential buyer should articulate positive feelings directly to the seller or his agent to help humanize the transaction."

An offer providing a sense of the buyer can stand out in a sea of anonymous bidders, according to broker Scott Greene of Prudential California Realty, Studio City. "I include a picture of the family with a pet or baby if possible along with a personal letter from my client to the seller," Greene said. "The letter explains how this home stood out from all the others, that they will take care of the house, and that they plan on raising their family in the house."

Doug and Alicia Jackson were showered with offers when they put their West Hills home on the market in August for $399,000. After countering three of the eight bids they received, they had to choose between three solid buyers with offers well above the asking price. Again, a personal letter decided it.

"I had a hard time letting go of my house because I had put a lot of work and effort into it," Doug Jackson said. "From the letter it was clear that the house had captured the buyers emotionally. The buyers wrote that when they walked in they felt like they were home and that we would be fulfilling their dreams. I knew they would take care of the house."

Still, money talks

Central to every home sale is the ability of the buyer to come up with the money. Because few buyers pay cash for a home, qualifying for a loan is the cornerstone of most transactions.

It is important that an offer stress the buyer's ability to fulfill the financial conditions, said Joyce Rey, a broker with Coldwell Banker Previews in Beverly Hills.

"Sometimes it is references or a letter from an accountant in addition to a pre-qualification or pre-approval letter," she said. "Anything that will give a seller comfort that the sale will go through should be included."

Pre-qualification letters provide the seller some reassurance because they suggest that the buyer is capable of qualifying for a loan. But because pre-qualification is issued before a lender confirms the accuracy of the financial information provided by the buyer, it is not a guarantee that the lender will ultimately approve the loan.

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