As real estate bidding wars become commonplace, it’s important to remember these adages:
- The early bird gets the worm.
- Always put your best foot forward.
Especially in areas where inventories are limited, three or more offers may be submitted within the first 24 hours after a property goes on the market. By the time your Day 3 offer rolls in, the deal is done – especially on short sales or bank-owned properties.
How do the early birds get in, tour the property and make offers so quickly? Chances are, they didn’t go see the property. That's right. The savvy investor knows the areas in which he wants to buy, he knows what size and type of properties he's after, and he knows what he’s willing to spend. So, when he sees a listing that meets his criteria -- he's able to pounce. If the offer is accepted, Mr. Early Bird can go see the property; if he doesn't like it, he can back out of the deal, generally at no cost (be sure to read your contract!)
This process may be frustrating for real estate novices, but it's just the way it is. And, honestly, if you don't know enough about your target properties and neighborhoods so that you, too, can make a quick offer -- you need to do more homework.
Becoming the early bird means you need to be well-versed with the offer process. Smart buyers know the standard contract terms and many go so far as to arm their real estate agents with signed, blank offering templates. If they see a listing they like, they can have their agent fill in the price and terms and forward the offer – all within hours of when the property first hits the MLS list.
Of course, first to bid doesn't always win the property. You can improve your chances by ensuring you’re submitting the best possible offer. Some tips:
Include a letter that pleads your case. Tell the seller why this is the perfect neighborhood for you, how long you've been looking, why you love the property (if you've been inside), and how you need a home to raise (or start) your family. Emphasize the aspects of your specific situation that might tug on the heartstrings of the seller or listing agent.
If it’s a traditional sale, ask to make your offer in person to the seller. Or, you might try to go see the property when the seller is at the house so they know who you are. Even having your agent personally deliver your offer may give you an edge. (Of course, this all takes substantial time so don't go this route unless you are 95 percent sure you will move forward on the terms you offer!)
Some listings require a lender pre-qualification letter and proof of funds. Whether they're requested or not, you should always include those with your offer (a pre-approval letter from a lender would be even better).
When seven offers come in and your offer includes your personal letter, plus a pre-approval letter from the bank, plus your proof of funds, plus your agent introducing herself to the listing agent, well, you might just beat out the cash-buying investors.
Knowing your target neighborhoods and markets, plus the process and contract terms, will allow you to act quickly when the right property becomes available.
From personal experience, I can tell you it does work. I’d love to write more but I just received an email about a listing for a property I know meets my criteria and I hope to have my offer in to the listing agent by the time you’ve finished reading this sentence. Good luck!
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Leonard Baron, MBA, CPA, is a San Diego State University Lecturer, a guest blogger on Zillow.com, the author of several books including “Real Estate Ownership, Investment and Due Diligence 101”, and loves kicking the tires of a good piece of dirt! See more at ProfessorBaron.com.
Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.