Vol. 252 - "My House!"
"My house, my house, my house . . ." Mateo's little voice sang out as he explored his new home, his little toddler legs taking him up the stairs with his mommy in hot pursuit. "My house!"
There are few events that give an agent as much joy as successfully closing a transaction and delivering the keys to the new owners (except perhaps, the incredible comeback run of our San Francisco Giants for the National League Championship that we all just witnessed in "their house." Go Giants!)
While I can't throw a fast ball (heck, I can barely see a fast ball) delivering your dream is what makes my work incredibly worthwhile.
("My house?" "Yes Mateo, congratulations.") It's the home run of Real Estate, so to speak.
Conversely, it's difficult news to deliver when a Buyer's offer falls short leaving him/her as runner up, as often happens in a rapidly-rising marketplace that offers up decidedly less supply than demand. (Hmmm . . .)
The hard truth is that in any marketplace, there is an intrinsic learning curve for Buyers, but in an escalating marketplace, it's often more challenging for them to quickly come to terms with the fact that they will need to make an offer well above the asking price in order to beat out the other interested parties lining up to bid.
Or put another way: the list price and the purchase price have almost NO relationship to one another!
Huh? What's that you say?
Remember, Realtors set a 'pricing strategy' only. Although we often drive the marketplace and certainly qualify value, we don't ultimately define the market value on any given property. (You; however, do!) It's why I often council my clients that they'll need to write their very BEST offer when multiple offers are at play.
What's more, to be truly successful in the world of "multiple offers," Buyers will need to set aside the analytical part of their brain that keeps them second guessing their offer amount and instead, carefully consider the intrinsic value of the home, community, neighborhood, schools, etc. For many of you, that's difficult to do . . .
"Can I sleep on it?"
Of course you can, but by the next morning, Buyers typically make the mistake of holding back "just in case" they are countered by the Seller. They want to know that there is something left to negotiate with, should it come to that AND they don't want to "overpay . . ." (I hear you but I respectfully disagree).
That's all well and good, but it won't help secure the home if the ball isn't hit into your outstretched glove. Moreover, chances are that if you receive a counter in a multiple-bidding scenario, other parties will have received a second opportunity as well, which results in both a race to the finish AND a popularity contest. (Gee, that's exciting - NOT!)
Let me save you some time and trouble, the winning offer will almost always pay the highest price and typically, with a substantial margin to boot. (Aggressive "terms" can sometimes persuade a Seller, but that's another story for another day.) You didn't "overpay." You paid what the market would bear, and if you are well coached, you have written in your inspection and appraisal and loan contingencies as a safety net to affirm the market value.
In short, you need to make the Sellers' decision very easy in order to get on base. If you can, it's best to take the tug-of-war between your offer and another, out of play altogether which sometimes requires you to up your ante prior to receiving a counter offer (that's a short-lived opportunity, but one that often works). If I get a sense you'll be "overpaying" for the property, I will be the first to tell you so (pinkie swear).
In the meantime, try to look at the BIG picture and put this home purchase into context - you are working with leveraged dollars, at a time where the affordability index has never been better and interest rates are hovering at historical lows, below 4% in most cases. If you lose this house to a more aggressive Buyer, the next one up for consideration is likely to cost you MORE (each successive sale creates a higher floor) and so it goes.
So if owning a home is in your future, listen to your manager, create a winning game plan, field your best team, set aside your strategy of "edging" out your opponent, swing for the fences and aim for a decisive victory or to quote Mateo, "MY HOUSE!" (Out of the mouths of babes . . .)
And if that isn't exciting enough, watch the San Francisco Giants in their quest for the World Series Championship. That's pretty darn exciting. (Who's got an extra ticket or two?)
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Julie Gardner, has been writing The Perspective for 18 years and has published more than 670 essays on life and real estate.