Okay, I'm going to admit it - I hate a line. To be more precise, I hate being in line - at the grocery store, the bank, the movies, the post office, the airport, the amusement park (what's amusing about that?) or anywhere else for that matter. No matter the reason, it always seems that lines add up to a colossal waste of time. While 'patience may be a virtue,' it's clearly not MY strength. So it might surprise you to learn that there are times when I am going to go against my natural grain and encourage you to "wait in line!"
In a perfect world, a Buyer finds a house they love, writes an attractive offer, and the Seller immediately accepts it on the spot (absent any fanfare or drama). Inspections begin immediately, contingencies are subsequently removed, financing is easily obtained and underwritten, the deal closes in short order, and everyone lives happily ever after!
Sounds like a fairy tale . . . and it is.
In the real world (or should I say in the "Real Estate" world) good houses are still trading in strong competition, especially here in Piedmont and Berkeley. Despite reports that indicate the NATIONAL market is still softening, LOCAL inventory is scant and interest rates are incredibly attractive. Put them together and this combination adds up to heavy pent-up Bay Area buyer demand. (Prepare to put on the boxing gloves.)
So what to do, given the circumstances?
The first is to realize that there's only so much we can control. Once you write your best offer, the rest is out of our hands. We simply can't control how many other offers will show up, OR dictate the terms of the other interested parties. (It's probably safe to assume they want the house as much as you do.) Unless you have "All Cash" to spend, even if you have the highest offer at the table, you may NOT have the best terms, which means you might find yourself coming up just short in the final analysis.
The second is to realize that our Spring Market is just getting underway. There will undoubtedly be many more houses coming to market in the next few months, and for the reasons outlined above, everything is pointing to very strong activity in the immediate future. Let's add to the list, a return of consumer confidence and skyrocketing rents (if you can even find a rental) and home ownership begins to look very encouraging once again. Take heart. Your opportunity is on the horizon.
The third, is to consider a "Back Up" position, which may be your best opportunity to slip into the sale without further competition should the Buyers in first position waiver for any reason. This has advantages and disadvantages that you should fully understand before agreeing to opt-in for second place.
The advantage obviously, is that it places you next in line. Should Buyer#1 exit the deal, Buyer#2 (that's you) immediately moves into escrow upon proof of cancellation of the first offer (it's important to make sure that the home isn't being sold twice).
Sounds good, so what's the disadvantage?
Here it is: the threat of a "Back-Up" Buyer is often enough to keep Buyer#1 in line. With you waiting in the wings, Buyer#1 isn't likely to risk the sale by renegotiating the price or pushing the contingencies, as they might otherwise do if they didn't have the added pressure of your looming presence. Still, short of writing the best offer, this may be the only opportunity you have to achieve your goal, so it is worth serious consideration under certain, selective circumstances.
Either way, it's important that you understand that you will be helping secure the purchase for the Seller!
Still, it may be worth a shot. I have clients who recently pursued this strategy on a darling bungalow in Berkeley and took it one step further by crafting their back-up offer slightly higher than the accepted offer.
Why? More money acts as a carrot and incentavizes the Sellers to show Buyer#1 the exit door should he/she falter in any way. In this particular case, Buyer#1 tried to change their terms after ratification of the contract, were then given a "48-hour Notice to Perform" and long-story-short, my clients are now happily in contract on this wonderful home (all's well that ends well - for them, anyway).
So write your own story (it doesn't necessarily have to be a 'fairy tale') and I'll do my best to deliver a happy ending!
Your comment will be posted after it is approved.
Leave a Reply.
Julie Gardner, has been writing The Perspective for 18 years and has published more than 670 essays on life and real estate.