At the start of the pandemic, the housing market nearly screeched to a halt. When most states moved to mandatory quarantining and strictly enforced social distancing, agents were, rightfully, concerned with the future of real estate. Now that some COVID restrictions have lifted, there has been an influx of buyers ready to make their move. However, the new challenge is that, now, there are not enough homes for sale to fulfill the number of buyers.
Many people are beginning to face the reality that they could be working from home for the foreseeable future. This is pushing a number of them to look for a larger home with more home office space. However, while buyers are ready to move into a new home to accommodate these needs, sellers are moving more slowly. This is partially due to financial fear but also a strong desire to keep strangers out of their home during a pandemic.
According to a recent report, new listings decreased by half during the second week of April when compared to that of 2019. Because of this, many buyers are in the midst of bidding wars. In order to help your clients make it through this challenging time, here are four tips to help your clients win a home-buying bidding war.
Ask About Pain Points
One of the best ways to encourage sellers to choose your client is by fulfilling a need. Talk to the seller’s agent ahead of time and let them know your clients are very interested in the home. Try to find out if there are any pain points, such as needing an earlier moving date, that you can help to alleviate. Once you have these ideas, talk to your clients to see if they’re flexible or able to help with this need. This can help put you at the top of the bidding list.
Shorten Your Contingency Timeline
Another option is to shorten your contingency timeline. This can be helpful because sellers can be more motivated to work with buyers who are less likely to back out. If there is less contingency time written into your contract, which would allow for more opportunity to change your mind, sellers may feel more confident with your clients. Therefore, shortening your contingency timeline can show that your clients are serious.
Money Talks
Ultimately, the majority of sellers are looking for the way to get the most return on their investment. While it’s not necessarily better to overshoot the listing price by a huge amount, offering slightly more can be beneficial. In addition to this, if you’re able to offer a cash payment, this is usually the most attractive offer, because it takes away opportunities for something to fall through with the lender. Unfortunately, this just isn’t an option for most buyers. If this isn’t something they can manage, encourage your clients to increase their down payment amount to show buyers they’re serious.
Make a Personal Connection
Finally, keep in mind that buying and selling a home is a highly emotional experience. Some sellers can be very particular about who they want living in their old home. After all, this is the place that they built so many of their memories. Ask the seller’s agent who their clients imagine buying their home. Once you have an idea, encourage your clients to write a letter to the owner that details why they want to buy this home. If they’re hoping to start their own family or want space for grandchildren to visit, be sure they include this kind of information. Not only could it align with the seller’s values, but it also heightens the emotion behind the transaction. This shows that your clients are more than just another number in the bidding war; they are real people.
While this is a challenging time for buyers in the real estate market, these four tips can help make it easier for your clients to find and win their perfect home. Help move your clients into their dream home this year, so they can start 2021 in the best way possible. During a challenging time in real estate you have to be diligent in winning a bidding war to get your clients the home they want. To join in on this conversation, head over to the Secrets of Top Selling Agents Facebook Group.
Mark Mathis is vice president of Sales for Homes.com. For more information, please visit marketing.homes.com.
Personal letters have become too common, they are overlooked and it’s all business. Which is the best buyer, not just the one offering the most money or a tear jerk story
if the house is an estate or the seller is older having the buyer offer to clean out whatever the seller does not want to take with them is very helpful in bidding wars. A lot of sellers are overwhelmed with how they are going to get the house emptied and how long it is going to take. Whatever the buyer can do to make the transition easier for the sellers sometimes means more than a few thousand dollars
Having prospective buyers write letters to sellers opens you up for the possibility of fair housing violations. Imagine a scenario where a lovely family writes a beautiful letter with pics of their kids/dogs, etc., then that buyer loses in a bidding war. Those buyers could take the position that the seller didn’t take their offer ‘because they don’t like kids’ or ‘they are a different race’. I think personal letters from prospective buyers has agents treading into dangerous territory.
Increase the earnest money amount. Since earnest money is applied to the down payment put the most fuel that you can afford upfront. Thus will show how serious a buyer is in their home.
The House Clean Out is an EXCELLENT idea……… thanks
Personal letters are also risky because they could run afoul of fair housing laws. For example, one of my agents wrote an introductory cover letter and said “my buyer is a single mom with two boys”. If the seller doesn’t choose this buyer, do they run the risk of being accused of discrimination on the basis of gender? marital status? Suppose you wrote a letter say Peter and Robert are a lovely couple looking for a special home in which to raise their little boy”. If the seller declines, could they be accused of discrimination on the basis of sexual orientation? Suppose your clients, a terrific Asian family, include a picture of their family? Lots of possible fair housing implications there. I strongly advise my agents to avoid personal letters and especially pictures at all costs.
The Colorado Real Estate commission discourages “love letters” because they can create a situation where there is a Fair Housing violation. While it seems like a good idea and I’ve seen it a lot in my 25+ years in the business, you can see where it could create a liability if the Seller chooses the “wrong” Contract.
I have found that an escalation clause, shortening the inspection period, and communicating that if we’re not already the clear best offer, please give us a counter that would allow us the opportunity to BECOME the best offer are all things that are really helpful. And I DO typically use a letter of introduction as long as the buyer is comfortable with it. I have wondered about Fair Housing violations though…. my understanding is that the risk really is this: yes, the buyer could open themselves up for being rejected if the seller didn’t like something about the people personally…but since the buyers are typically not aware of who the other competing offers are from, and agents communicate typically just that “they chose to go with another offer” and the offer amounts and terms are confidential, there would have to be a very clear cut scenario where it was even obvious that a seller made a choice to go with one buyer over another for reasons that were a violation of fair housing…most of the time, the buyers have no idea who they chose. I find that by including a letter of introduction from me about the buyers, I’m able to communicate willingness to be flexible on some terms or other information that might be compelling including the heartstring pulling, and really the seller is the one at risk of violation…not me as the buyer’s agent, and not the buyer…..correct???? Am I missing something? I think this is where listing agents have to advise sellers of their obligation not to discriminate….but then on the other hand…if you get two offers that are the same, and one writes a letter and one doesn’t….or even if they both don’t…what becomes the thing that makes a seller choose one and not the other…. I have found that the personal connection DOES help….so unless *I* or my buyer are in danger of violating the law, I will keep doing what works. I have had many people choose us, or come back to us because of the letter…. I aim for personal warmth, compelling info, and professionalism.
This Business always Has great stories and events of learning. As a Listing agent with multiple offers, The one accepted had a $5,000 closing cost credit to the SELLER! It was VA. The Selling agent said she has used this method before, as it produced a higher net proceeds to the Seller and had a better probability of appraising, rather than raise the offer price $5,000.0. This transaction did close as written.
This is brilliant!!! I work with a lot of VA clients. This is great! Thanks for sharing.
T A L K to the listing agent before the showing to prepare for the offer. What are the Sellers ideal times? 1) escalation clause, 2) shortening the inspection period, 3) be date specific, sellers love a target for planning; appraisal release, closing date and possession. 4) include the approval letter. 5) Make it an offer that is acceptable or Be the “best and final” or “counter” that would allow the seller the opportunity to Accept. ~~Write the best offer with components that the Listing agent can present.
Although I have used letters in the past, I now think they can run afoul of Fair Housing laws. The buyer can find out what the house sold for and the terms when the property closes. Mortgage information can be found in public records. Sellers should be instructed to select the “highest and best” offer and leave it at that. They don’t want a lawsuit six months down the road. I love the clean out idea.
I am going to keep this brief “Fair Housing”
Careful with the buyer “Love Letters”, NAR recently flagged that as being a potential fair housing violation and potential legal issue.
Writing a letter has been a hot topic lately, and virtually every agent I know says it’s a huge no-no and a violation of the fair housing act. I would not recommend this at all to my client – it opens them, myself and the other agent up to a lawsuit. No thank you!
Good grief,….STOP calling them LOVE LETTERS! And if that is what your call them, or think that’s what they are, then you are right — “YOU” need to stay away from them. I personally called our FLORIDA LEGAL HOTLINE and they are not a violation. It is discouraging that agents are SCARED and/or uncapable of putting together a “personal connection” or “ABOUT ME” letter to accompany their Buyer’s offer. It’s called “putting a personal touch on” and/or “going the extra mile” to help your client’s offer stand out! There is NOTHING in REAL ESTATE,…no rules, no regulations, no laws,…or code of ethics that says you should not make a connection between a buyer and a seller. As a professional courtesy, I always ask the Listing agent to please consider including the letter with the offer,…however, I leave that choice up to them. It’s just another form of communication,..and heaven knows we all need to communicate,..more AND BETTER! Try a personal letter sometime,…. 🙂
On VA loans, I have had the chain of command write a recommendation letter. I also have taken a lesser commission on VA. Being a retired veteran, I understand the value their service to country does for me.
I agree with escalation clause, short inspection or no inspection period. Buyer to pay for home warranty.