Welcome to San Diego Blog | April 14, 2010
When buying a home, can I make only one offer?
Over the past few months, I have had a few different buyers ask me if they can make offers on more than one property at the same time. The answer to this question is quite simply YES. There are a few benefits to making more than one offer when you are searching for a home or an investment property.
The Top 3 reasons why San Diego Home Buyers Need to be Agressive
First of all, the San Diego real estate marketplace is competitive. If you are making an offer on a property in Downtown San Diego, the Balboa Park area or the coastal zones of San Diego, most properties for sale around $550,000 or below sell quickly and often receive many offers. This means the chances of your offer getting accepted are not always favorable.
Now I’d like to elaborate on “not always favorable”. Buyers frequently ask me how much I think they should offer. This is really a tough question because if there are 5 offers on a house, the common counter we receive is “highest and best”. This means you need to respond with a counter offer with the highest price and best terms you are willing and able to pay.
The difficult component about figuring out the “highest and best” response is the fact that you are up against the emotions of the other buyers. If two of the buyers are investors, then they may have cash which works in their favor, but most likely won’t overpay for the property.
However, if the other 2 buyers are looking for their personal home and “are in love” with the property, then it is not uncommon for all common sense to go out the window. These buyers will often “shoot from the hip” with however much they qualify for. It is really hard for an agent to give a rational answer to the question when you are up against irrational consumers.
I actually had a funny conversation with some buyers I represent about this very topic. The first house I ever showed them was a charming 3 bedroom 1 bath craftsman in Southpark. It was listed for $479,000 and they were considering making an offer, but didn’t quite know exactly what they wanted yet. They had asked what I thought the house would sell for and I told them, “well over list price”. They were shocked so I told them that we would follow the house and see what it sold for so they could gauge the level of competition in the marketplace.
The house eventually closed escrow at $536,000! I asked my clients what they would have thought if I had told them they needed to offer $58,000 over list price to have their offer accepted. They said that they probably would have thought I was crazy and may have actually looked for a different agent because it was our first day looking at property and they didn’t know me and my work ethics at that time.
If these clients had made an offer on this property and waited the 11 days it took for the seller to respond, they would have lost 11 days in their search and could have been pursuing other opportunities.
Next, many of the properties on the market are short sales. Unless the listing agent is well versed in the short sale process and ethical, the chances of an offer being accepted and successfully closing escrow in a timely manner is limited. The problem isn’t the fact that the property is a short sale, but often, the lack of integrity with which short sales are handled by real estate agents.
Some agents will submit an offer to the bank on a short sale and leave it as active even though they have submitted an offer to the bank. What this means is that the agent is not working with one buyer so there is no loyalty in having your offer accepted as they are still fielding many offers.
Finally, if you are looking to take advantage of the federal and state tax credits, you need to have a signed contract by June 30th. The clock is certainly ticking, but if you don’t make the June 30th deadline, you may still qualify for the California $10,000 tax credit.
If you have any other questions about making offers on property, tax credits, or anything real estate related, just respond to this post and we’ll answer your question for all to see.