How to get an accepted offer on a house - California edition
October 5, 2016 5:28 PM Subscribe
We are trying to buy a house, Southern California edition. We really like it! Our realtor believes it was priced to invite a multiple offer situation (it was listed yesterday and the listing comments state offers will be considered a week from now). We'd like to see if we could avoid getting into a bidding war. Can you help us?
Right now we've been considering three options. Our realtor advises making our "best offer" as the initial offer (but he's also urged us to bid up when we didn't need to, and got an accepted offer without having to bid up) and gave up the house because of a little issue with the foundation . So we'd appreciate input.
We have a very nice letter (which people have gone out of their way to comment that they really liked) and we were thinking about either offering:
a) 101% of asking (Mr. Arnicae's suggestion)
b) 102% of asking (my initial thought)
c) 100% of asking
We were hoping to make an offer today and explicitly say the offer would expire on Saturday - so the realtor would have to present the offer to the sellers before the stated Tuesday deadline. Our goal is to have an accepted offer prior to Tuesday, because we strongly suspect we will be in a multiple offer situation if we just toss an an offer of 99% in and hope for the best. I thought that presenting our "best offer" which happens to correspond with our pre approval amount was the best way to win the house (we're including our pre-approval in the letter, so one hopes they'd realize we were offering everything we can). Mr. Arnicae thinks that us offering 102% would suggest to the sellers that they could conceivably get a bunch more money for the house and would spur a bidding war. FWIW, they paid 104% of the list price for the house when they bought it several years ago (a considerably lower sum than today). We cannot afford to offer 104% of asking.
If you aren't in California, we are in a very hot seller's market and houses in our zip code on average have been selling for 99-101% of list.
Right now we've been considering three options. Our realtor advises making our "best offer" as the initial offer (but he's also urged us to bid up when we didn't need to, and got an accepted offer without having to bid up) and gave up the house because of a little issue with the foundation . So we'd appreciate input.
We have a very nice letter (which people have gone out of their way to comment that they really liked) and we were thinking about either offering:
a) 101% of asking (Mr. Arnicae's suggestion)
b) 102% of asking (my initial thought)
c) 100% of asking
We were hoping to make an offer today and explicitly say the offer would expire on Saturday - so the realtor would have to present the offer to the sellers before the stated Tuesday deadline. Our goal is to have an accepted offer prior to Tuesday, because we strongly suspect we will be in a multiple offer situation if we just toss an an offer of 99% in and hope for the best. I thought that presenting our "best offer" which happens to correspond with our pre approval amount was the best way to win the house (we're including our pre-approval in the letter, so one hopes they'd realize we were offering everything we can). Mr. Arnicae thinks that us offering 102% would suggest to the sellers that they could conceivably get a bunch more money for the house and would spur a bidding war. FWIW, they paid 104% of the list price for the house when they bought it several years ago (a considerably lower sum than today). We cannot afford to offer 104% of asking.
If you aren't in California, we are in a very hot seller's market and houses in our zip code on average have been selling for 99-101% of list.
I wouldn't believe you wouldn't still take the house 3 days later, so I'd ignore your letter and wait three days for a better one. You may as well just chuck in a lower bid and see if it's overpriced at that point, or do escalation.
(as an aside, if you can't afford 104% you can't afford 100% either)
posted by flimflam at 5:46 PM on October 5, 2016 [18 favorites]
(as an aside, if you can't afford 104% you can't afford 100% either)
posted by flimflam at 5:46 PM on October 5, 2016 [18 favorites]
I would go with 101% and know that if you don't get it, there will be another (I live in Orange County so I get what you're talking about, but it's never the last house you'll ever love and be able to afford). Emotion coupled with a tight market leads to overpaying.
posted by cecic at 5:54 PM on October 5, 2016 [8 favorites]
posted by cecic at 5:54 PM on October 5, 2016 [8 favorites]
Make your best offer and be prepared to walk away if it's not accepted. You only get into a bidding war if you chose to get in a bidding war. The sellor wants the best possible price and they know it's on their side. I agree with flimflam they they won't believe you wouldn't still take the house 3 days. They'll want to maximise their options. Maybe if you offered me 125% of the asking price I'd take it off the market a few days earlier than my deadline but not for 2% over.
Disclaimer: I'm used to the Sydney housing market which is freaking insane and properties sell waaaaay over the asking price.
posted by kitten magic at 5:54 PM on October 5, 2016 [8 favorites]
Disclaimer: I'm used to the Sydney housing market which is freaking insane and properties sell waaaaay over the asking price.
posted by kitten magic at 5:54 PM on October 5, 2016 [8 favorites]
Emotion coupled with a tight market leads to overpaying.
This a million times.
posted by kitten magic at 5:56 PM on October 5, 2016 [13 favorites]
This a million times.
posted by kitten magic at 5:56 PM on October 5, 2016 [13 favorites]
Yeah, agreed. If I were the sellers, I'd still wait until the Tuesday, especially if we are only talking a difference of a percent or two. (I don't know what houses where you are go for, but even here with a median well over 1 million, 1% is less than the anticipated difference if they get two or more buyers into a bidding war.)
Also, especially since you don't really trust your realtor, I'd be double checking that houses really are only going for a percent or two over asking value. That doesn't sound like any hot market I know. (Here they tend to go for 20-30% over asking when there are multiple bidders, which is most of the time).
posted by lollusc at 5:58 PM on October 5, 2016 [6 favorites]
Also, especially since you don't really trust your realtor, I'd be double checking that houses really are only going for a percent or two over asking value. That doesn't sound like any hot market I know. (Here they tend to go for 20-30% over asking when there are multiple bidders, which is most of the time).
posted by lollusc at 5:58 PM on October 5, 2016 [6 favorites]
When we sold our house in a hot market, we listed it for slightly under what we thought it would sell for in order to get more offers. (Think $195 instead of $205). So the buyer may be planning on getting more than the listing price anyway.
I would make it clear that this is your best and final offer (since it is) and look at what you can do to make it as easy and as certain to close as possible. For example, large earnest deposit, quick deadlines on contingencies, fewer contingencies.
And then just be prepared not to the get the house.
posted by metahawk at 6:04 PM on October 5, 2016 [3 favorites]
I would make it clear that this is your best and final offer (since it is) and look at what you can do to make it as easy and as certain to close as possible. For example, large earnest deposit, quick deadlines on contingencies, fewer contingencies.
And then just be prepared not to the get the house.
posted by metahawk at 6:04 PM on October 5, 2016 [3 favorites]
In my experience (in LA) the seller isn't even going to entertain your offer before that deadline. Stop trying to game it -- bid what you'd actually like to pay for this house, and be prepared to move on if that isn't good enough. There may be a bidding war, but that doesn't mean you have to participate in it.
posted by BlahLaLa at 6:15 PM on October 5, 2016 [23 favorites]
posted by BlahLaLa at 6:15 PM on October 5, 2016 [23 favorites]
Anecdotally: I bought a house in LA earlier this year. I was outbid on several houses before I got an accepted offer, but if I remember correctly every time I made an initial offer I was given the opportunity to respond to the counter offer based on the best offer the seller received. After the first couple of times it happened, I would just offer asking and then wait for the counter offer to see what the seller really wanted. Which was usually more than I could pay. (But not the last time, yay!)
Stay strong, I know it's hard out there (:
posted by justjess at 6:20 PM on October 5, 2016 [2 favorites]
Stay strong, I know it's hard out there (:
posted by justjess at 6:20 PM on October 5, 2016 [2 favorites]
You probably won't get it. Another house will come along if you don't get this one.
Now, offer a good price that you can afford, as unencumbered as possible.
posted by Sebmojo at 6:22 PM on October 5, 2016
Now, offer a good price that you can afford, as unencumbered as possible.
posted by Sebmojo at 6:22 PM on October 5, 2016
Yeah, you really can't game it. Just make your best offer and step away. If there are multiple offers and yours is the highest, the sellers are probably still going to come back and ask for best and highest. That's when you refuse to bid higher, staying your first offer was your best. And then wait.
posted by raisingsand at 6:33 PM on October 5, 2016 [1 favorite]
posted by raisingsand at 6:33 PM on October 5, 2016 [1 favorite]
We just bought a home in Southern California. We made ten offers on houses, some of which we were the highest bidder, and the buyer went with an all-cash offer. This last time, it was open to all bidders, with an encouragement to give our highest offer. Twenty other people made offers. We went 5% over the listing/market price, and there were some higher than us. We got the sale because we made a good connection with the buyer. On the flip side, though, we sold our old home twice within a week each time, the second after our first housing purchase fell through and we couldn't get an accepted offer on a new house within three months. It is certainly a seller's market, which makes it much harder to buy after you sell.
All this to say, you may need to consider going all-in on what you can realistically afford (assuming you are relatively near market value), trusting that if you go a little over, you can see it as an investment over time. Also, if you have any contingencies at all on either side of the purchase (you need to close your funding, or the seller needs to find a home after sale), it makes everything trickier. So, keep in mind that your offer has to potentially beat cash offers that make the sale slide a whole lot easier through the process for the seller.
None of this to discourage you (although I'm sure it doesn't sound encouraging), but it's a matter of keeping at it until you get something, and giving it your best realistic offer, usually right out the door. We had very few situations in which the buyer was willing to haggle between offers, because it is such a seller's market, they can just take a good offer and be done with it. To get the best chance at it, though, you have to keep in mind that people are paying all-cash as investments (sometimes just to flip the house), or are overbidding to beat out other people who can come close to the market value. Also, personal connections matter, if you can make it work. The letter made all the difference for us.
Good luck to you, and don't get discouraged! Buying a house here these days is many times about playing out the odds, expecting to make a lot of offers before something works. If you are fortunate, though, this could be it! We almost had our first offer accepted, then we had to wait... patiently.
posted by SpacemanStix at 6:43 PM on October 5, 2016 [2 favorites]
All this to say, you may need to consider going all-in on what you can realistically afford (assuming you are relatively near market value), trusting that if you go a little over, you can see it as an investment over time. Also, if you have any contingencies at all on either side of the purchase (you need to close your funding, or the seller needs to find a home after sale), it makes everything trickier. So, keep in mind that your offer has to potentially beat cash offers that make the sale slide a whole lot easier through the process for the seller.
None of this to discourage you (although I'm sure it doesn't sound encouraging), but it's a matter of keeping at it until you get something, and giving it your best realistic offer, usually right out the door. We had very few situations in which the buyer was willing to haggle between offers, because it is such a seller's market, they can just take a good offer and be done with it. To get the best chance at it, though, you have to keep in mind that people are paying all-cash as investments (sometimes just to flip the house), or are overbidding to beat out other people who can come close to the market value. Also, personal connections matter, if you can make it work. The letter made all the difference for us.
Good luck to you, and don't get discouraged! Buying a house here these days is many times about playing out the odds, expecting to make a lot of offers before something works. If you are fortunate, though, this could be it! We almost had our first offer accepted, then we had to wait... patiently.
posted by SpacemanStix at 6:43 PM on October 5, 2016 [2 favorites]
Sorry, in my first paragraph, "buyer" should be "seller" in a couple of places.
posted by SpacemanStix at 6:49 PM on October 5, 2016
posted by SpacemanStix at 6:49 PM on October 5, 2016
Sorry, the sellers are clearly looking for a bidding war and will prob ignore your offer unless it's significantly higher than the asking price, or cash. If I were you I'd put down your best offer plus as much Ernest money as you can.
posted by pintapicasso at 7:43 PM on October 5, 2016 [1 favorite]
posted by pintapicasso at 7:43 PM on October 5, 2016 [1 favorite]
We're trying to buy (in Northern CA), and we're still talking about "the house that got away" for less than $1000 over what we bid. I would not rely on the chance to counter offer. If you really want it, bid as much as you're willing to pay, with the most down, the most earnest money, and the fastest closing timeline you can manage.
posted by slidell at 8:08 PM on October 5, 2016 [2 favorites]
posted by slidell at 8:08 PM on October 5, 2016 [2 favorites]
I bought a house last year in LA after losing out on 3 bidding wars (and I still have pangs of regret over the house I overbid 100k on that ended up going for 150k over asking)! The house I ended up with has a better layout though and a pool. I will need to redo the kitchen and bathrooms but I'm really looking forward to it -- and it's really the only reason I was able to get this place. The last buyers backed out after inspection and the seller was eager to be done with it already.
So in short, try really hard not to get too attached, especially to homes where the seller is counting on a bidding war. Write the best offer you can and then keep looking. Timing is truly everything.
Also, it sounds like your realtor may be less than awesome. I have an LA based referral who is great (he was friends with the realtor representing the seller which was probably what sealed the deal on this house). Feel free to PM me for the details.
posted by ohyouknow at 8:43 PM on October 5, 2016
So in short, try really hard not to get too attached, especially to homes where the seller is counting on a bidding war. Write the best offer you can and then keep looking. Timing is truly everything.
Also, it sounds like your realtor may be less than awesome. I have an LA based referral who is great (he was friends with the realtor representing the seller which was probably what sealed the deal on this house). Feel free to PM me for the details.
posted by ohyouknow at 8:43 PM on October 5, 2016
If you really want to buy the house before the Tuesday deadline, show up with a suitcase full of cash of 100% of asking. Show it to them. It is really hard to walk away from cash on the barrel.
posted by AugustWest at 8:45 PM on October 5, 2016
posted by AugustWest at 8:45 PM on October 5, 2016
5 condos in my Los Angeles area complex have sold this year. Here are the list/sold prices. One was mine, so I followed things pretty closely.
350/385. High end upgrades
369/380 ditto
350/351. Original old ugly condition
369/375 moderate upgrades.
350/375 moderate upgrades.
It's a hot market. Make your best offer. After price, we were swayed mostly by how solid the financing was and how put together and professional the offer was.
Good luck!
posted by SLC Mom at 9:14 PM on October 5, 2016
350/385. High end upgrades
369/380 ditto
350/351. Original old ugly condition
369/375 moderate upgrades.
350/375 moderate upgrades.
It's a hot market. Make your best offer. After price, we were swayed mostly by how solid the financing was and how put together and professional the offer was.
Good luck!
posted by SLC Mom at 9:14 PM on October 5, 2016
If you're working with a good agent, they'll be in close contact with the sellers agent and they'll have good advice about how to get your offer accepted.
posted by bendy at 9:27 PM on October 5, 2016 [1 favorite]
posted by bendy at 9:27 PM on October 5, 2016 [1 favorite]
You mention walking away from one accepted offer due to foundation issues...are you going in with inspection/finance/appraisal contingencies? Have you tried dropping all contingencies? Can your mortgage broker shave some days off the time to close? What is your agent advising?
I come from the bay area and any offer we made, even over ask, was non competitive until we started dropping contingencies.
Adding to the chorus, I don't think you can get them to accept it before Tuesday unless you are presenting a much more attractive offer than 102%, sorry to say. If it was all cash, maybe.
posted by handful of rain at 5:30 AM on October 6, 2016 [2 favorites]
I come from the bay area and any offer we made, even over ask, was non competitive until we started dropping contingencies.
Adding to the chorus, I don't think you can get them to accept it before Tuesday unless you are presenting a much more attractive offer than 102%, sorry to say. If it was all cash, maybe.
posted by handful of rain at 5:30 AM on October 6, 2016 [2 favorites]
The only way your plan to have an offer that expires before the stated date that the seller will start considering offers is to make them such an incredible offer they risk losing money by not taking it. 102% of list in a scenario where they expect a bidding war is not that kind of offer.
As others have said, offer what you can offer. If what you can offer isn't enough, this isn't the home for you. I get it, I'm in the Bay Area and it is insane up here too. I'm thinking about selling and really I just want the most $$ w/ least amount of hassle. Someone giving me an essentially low offer with the bullying tactic that it would expire before my stated date of reviewing offers would get that offer relocated to the recycle bin and likely refusal to reconsider even if they came up with more $. (Sorry, but not really sorry.)
posted by CoffeeHikeNapWine at 8:28 AM on October 6, 2016 [7 favorites]
As others have said, offer what you can offer. If what you can offer isn't enough, this isn't the home for you. I get it, I'm in the Bay Area and it is insane up here too. I'm thinking about selling and really I just want the most $$ w/ least amount of hassle. Someone giving me an essentially low offer with the bullying tactic that it would expire before my stated date of reviewing offers would get that offer relocated to the recycle bin and likely refusal to reconsider even if they came up with more $. (Sorry, but not really sorry.)
posted by CoffeeHikeNapWine at 8:28 AM on October 6, 2016 [7 favorites]
I agree with most posters that you probably can't avoid a bidding war if the seller wants one. But, to answer your question, theoretically you could give them an exploding offer. So, if seller has said "I'm considering offers on 10/12," you could show up with an offer of as much was you want to spend on the house, say 102% of asking, on 10/9 and say "this offer is only good until 5pm on 10/10. And see what they do. But most likely they'll reject and see if they get the bidding war they want.
posted by craven_morhead at 11:31 AM on October 6, 2016
posted by craven_morhead at 11:31 AM on October 6, 2016
I sold a house earlier this year in a hot housing market on the east coast. Dittoing all of the people that said sellers will wait until the deadline to see what rolls in. Two additional points I wanted to make. One, It isn't all about the offer price - a clean bid counts for a lot. In my case, I got five serious offers and three "complicated" offers in the first 72 hours the house was on the market. I ended up accepting an offer that was slightly under my asking price because it was a very clean offer: all cash deal, fast close, no contingencies. The offers that came in above asking had various contingencies that greatly increased the risk of not being able to close. Second point: in my metro, cash rich buyers with questionable ethics will sometimes make extravagant offers way over listing price, secure in the knowledge that the house won't appraise or they can always "find" a problem during due diligence. They are essentially "buying" a right of first refusal by putting up the earnest money to lock up a house. A savvy listing agent will see that for what it is, but that doesn't mean sellers will listen. So tactics like bidding 101% don't help if someone shows up with a bid for 110% or 125%. Good luck, and remember, you just have to find one house and new houses are coming onto the market every week. I was also on the buy side of the table this year and my partner and I walked through 76 houses before everything worked out and we got something under contract.
posted by kovacs at 7:18 PM on October 6, 2016 [1 favorite]
posted by kovacs at 7:18 PM on October 6, 2016 [1 favorite]
Echoing what a lot of other people have said upthread: 102% with an early expiration date will not strengthen your position, and risks the seller writing you off entirely. There are two times where you can get away with an offer that expires before the seller's stated date. One is a godfather offer (110+%). The other is if you can get inside the house the day it's listed, before the first open house, and you can convince the seller (or more likely the seller's agent) that accepting your offer immediately will save them the hassle of hosting an open house.
This is not either of these cases. Bid as much as you're willing to pay, and wait to see what happens. Markets are unique, but I can tell you that around me (Boston), places are routinely going for 10-15% over list, and/or with cash offers. If they do manage to spark a bidding war, don't be surprised if it goes for 110+%.
posted by Mayor West at 4:23 AM on October 7, 2016
This is not either of these cases. Bid as much as you're willing to pay, and wait to see what happens. Markets are unique, but I can tell you that around me (Boston), places are routinely going for 10-15% over list, and/or with cash offers. If they do manage to spark a bidding war, don't be surprised if it goes for 110+%.
posted by Mayor West at 4:23 AM on October 7, 2016
This thread is closed to new comments.
posted by soren_lorensen at 5:33 PM on October 5, 2016 [2 favorites]