5. Emotional connection.
Agent Dennis Hsii of Playa Vista Premiere saw just how effective this tactic can be when his buyer won a bidding war with 13 others on a $1.1 million Santa Monica home in November. Hsii’s buyer, who took out a loan, beat out five all-cash offers and others worth more money. Hsii said it all came down to an initial meeting with the listing agent, homeowners, and neighbors. Then he hand-delivered the offer in a gift-wrapped package, with a bow on top, that included a personal letter to the seller explaining why the buyer loved the home and how it would be perfect for the family.
1. Price right.
Price the home in a manner that invites multiple offers. That can drive the price of the home up. “Let’s say the magic number for your house is $2 million, and you price at $2.3 million. You’re going to get $1.95 million. If you price it at $1.95, you might get $2.5 million,” said Jeffrey Saad, an agent at Compass in Beverly Hills. “You can make an extra $100,000 just by pricing for multiples versus pricing too high and slowly reducing over a few months.”
2. Highest doesn’t mean best.
An offer that comes in a lot higher than the others could be cause for concern. Carrie Rollings Meynet of Gibson International in Brentwood said she learned that the hard way while selling a $1.5 million condo last year that received eight offers. Her client accepted the highest offer, which was well-above asking price. “Some agents will represent buyers who throw in an unbelievable price point just to secure their position in a multiple,” she said. Then they ask for large concessions. During her inspection, the buyer asked for extremely high credits – or monetary deductions – based on perceived flaws with the unit. The deal fell out of escrow because an agreement couldn’t be reached.
3. Have a backup.
In the case of the condo with multiple offers, Rollings Meynet had secured a backup offer in writing. “As an agent, it’s important to maintain communication with backups, making sure the backup position is still a viable offer,” she said. “If you don’t have a backup, you may have to show the house in open house again.”
4. Plan for a low appraisal.
Banks will typically lend 80 percent of a home’s appraised value, so if a property appraises for less than the purchase price, the buyer will have to come up with more cash. Anticipating a lower appraisal, Saad and his wife, Nadia, also an agent with Compass, chose a buyer with a down payment higher than 20 percent, for a $900,000 condo in Westwood. “The buyer stayed because they had a higher down payment. If we had gone with a lower down payment, the deal wouldn’t have closed,” he said.
5. Evaluate emotional commitment.
“When I see that a buyer is truly emotionally married to that property, they want to stick through the hard stuff during escrow,” said Rollings Meynet. “Like (if) your plumbing is shot in the house – this is overwhelming to the buyer. Is it so overwhelming that they’ll walk?”
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