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8 ways home buyers can make their offer stand out - San Francisco Chronicle
3/16/16, 10:43 PM
Biz & Tech
8 ways home buyers can make their
offer stand out
By Kathleen Pender | May 29, 2015 | Updated: June 16, 2015 12:25pm
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Photo: Liz Hafalia, The Chronicle
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Home buyer Susan Giddens (right) views a home with her agent Linnette Edwards (left) which she recently bought in
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8 ways home buyers can make their offer stand out - San Francisco Chronicle
3/16/16, 10:43 PM
Oakland, California, on Wednesday, May 27, 2015. Giddens toured the property two weeks ago for ... more
Gone are the days when offering top dollar was enough to buy a house.
In today’s hypercompetitive market, buyers are going to great lengths to make their offers
stand out. They are making an impression at open houses, paying for inspections before they
make an offer, submitting offers without loan or appraisal contingencies even if they need a
mortgage, and romancing sellers with letters, photos and even videos of themselves, kids and
pets.
“If you really want the property and aren’t
walking up with a briefcase full of cash,
you need to find little ways to make a big
impact,” said Zephyr Realtor Joel
Schilperoort.
When a house gets 10 or 15 offers, Pacific
Union agent Radhi Ahern encourages the
seller to choose one that offers the most
money with the least risk. “Sometimes we
go to the highest offer and ask if they can
tighten up their terms,” she said. “Sometimes we take a lower offer because there is no risk —
no financing, no inspection, no appraisal contingency.”
Here’s a look at tactics buyers are using,
MORE BY KATHLEEN PENDER
and some of the risks involved.
Make a good impression at open houses.
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8 ways home buyers can make their offer stand out - San Francisco Chronicle
furniture,” said Zephyr Realtor Diane
Hourany. If there’s more than one open
house, go back. “If they show their face
every time the place is open, and the seller
gets an offer from them, they know they
are committed.”
Get a pre-offer inspection. Linnette
Edwards, an associate broker with Better
Homes and Gardens in the East Bay,
encourages buyers to get a verbal
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inspection before making an offer. Because
it’s not in writing, it does not go into the
disclosures sellers must provide potential buyers, Edwards said. It’s also cheaper than a
written inspection. If the offer is accepted, the buyer can follow up with a written inspection.
Getting an early inspection lets buyers present an offer without an inspection contingency.
Susan Giddens, a client of Edwards’, paid for verbal appraisals on about 10 places. She ended
up making three offers. The first two were rejected but the third was accepted and she will
close on a condo in Oakland’s Temescal neighborhood this week. On that home, she didn’t
have an inspection done because the seller had provided one from an inspector that Edwards
knew well and respected. Giddens made the offer without an inspection contingency.
In some parts of the Bay Area, many sellers are paying for home, sewer line and pest
inspections and disclosing them up front, “so buyers can make an informed decision in this
chaotic market,” Ahern said.
Remove or pad the appraisal contingency. Removing an appraisal contingency might be
necessary, but it’s dangerous. If the home appraises for less than the purchase price, the buyer
might have to make a bigger down payment, switch to another (probably higher-cost) loan or
cancel the contract and forfeit a deposit.
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8 ways home buyers can make their offer stand out - San Francisco Chronicle
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Some buyers are doing a “soft appraisal” that says, if the house appraises for a certain amount
below the purchase price, they can back out of the deal and keep their deposit, Edwards said.
Giddens originally offered $714,000 with a $20,000 appraisal contingency on her condo,
which was listed at $535,000. But there were multiple offers and she raised hers to $751,000
with a $30,000 appraisal contingency. That was the most she could risk. If she removed the
contingency and it appraised for less than $751,000, she could not get her loan and would lose
her deposit.
The seller said he would take someone else’s offer unless she dropped the contingency. After
talking with her lender and agent, she felt confident enough in the home’s value to drop the
appraisal contingency and her offer was accepted. (It appraised Thursday at $755,000.)
If you need a loan, get a letter. The first step in getting a loan is getting prequalified, which
means telling a loan agent how much you make and getting a general idea how much you can
borrow. You can get a prequalification letter that shows this amount, but it won’t get you very
far with sellers.
The next step is getting a preapproval letter, which can mean very different things depending
on the lender. At a minimum, the loan agent pulls the customer’s credit report and puts
information supplied by the customer about income and assets into an automated underwriting
system. The customer gets a letter saying he or she is preapproved for a certain amount,
subject to certain conditions. The conditions vary depending on what went into the approval
process.
Bank of America requires customers to fully document their income and assets before they
can get a preapproval letter. “We do full-on underwriting,” said senior vice president Scott
Lorkis.
It does not issue the letter until the loan has been approved by an underwriter. The only
conditions in its preapproval letters have to do with the property, not the borrower.
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8 ways home buyers can make their offer stand out - San Francisco Chronicle
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Wells Fargo, on the other hand, does not require customers to provide any documentation
before getting what it calls a Priority Buyer preapproval letter. Its preapproval is still subject
to verification of all information provided by the buyer, as well as property-related conditions
and approval by an underwriter.
Wells has created a step that requires customers to submit a full application and all the
documentation necessary to get a loan except a property address. Then it goes to an
underwriter who signs off on it. “We call that a mortgage credit approval letter” and it means
the borrower “is fully vetted,” said Brad Blackwell, an executive vice president with Wells
Fargo Home Lending. But it is still subject to property conditions, such as a title report,
appraisal and, for condos, review of the homeowners association documents.
To find out how solid a preapproval letter is, ask if it has been approved by an underwriter, not
just a loan agent or automated system. Once it has, there shouldn’t be any borrower-related
issues and buyers can usually close quickly, sometime in just 15 days if appraisers are
available. Banks have developed this process so those who need loans can compete better
with all-cash buyers.
Show proof of funds. Even when listing agents do not ask buyers to show proof of funds, “I
find it to be a hugely beneficial way to strengthen your offer,” Schilperoort said. It shows the
seller “that you have the liquid assets readily available for the down payment.”
Write a clean offer. Neatness counts. “It should be legible with all the right boxes filled in so
the agent on the other side doesn’t have to come back to me and say, ‘Did you really mean
this?’ or ‘You forgot to initial that,’” Hourany said.
Sign off on disclosures. Read and sign all disclosures provided by the seller and submit them
with your offer, rather than waiting until your offer is accepted.
Write (or film) a love letter. Although they are not new, writing a letter has become almost
de riguer. Letters tell about the buyers, why they love the property and how they will care for
it.
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8 ways home buyers can make their offer stand out - San Francisco Chronicle
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Flattery often helps. “We’ve been patiently looking for a home with the old world charm and
character that your home embodies,” Linda and Emil Lovely wrote to the owner or a condo in
Lower Pacific Heights, which they purchased last year.
Zephyr agent Laura Kaufman said she represented a seller who accepted $40,000 less than the
highest offer because she was so moved by a letter from a buyer who had lost his wife and
was raising two daughters.
Jessica Branson, an agent with Alain Pinel in San Francisco, said sellers rarely accept less
money because of a letter alone, but if it strikes a chord, they might work with that buyer to
come up with a winning bid.
Letters can sometimes backfire, she added, if they read like resumes or come off as pompous.
“They have made and broken a lot of offers.”
Branson said she recently got a video from potential buyers. “They went to locals in the
neighborhood and got them to sing a song about what a great addition they’d be to the
neighborhood.” They lost out to a higher bid.
Although buyers often include a photo, it could pose a problem for sellers. In California, it is
illegal to refuse to rent or sell a home to someone based on race, color, religion, sex, sexual
preference, age, marital status, national origin, ancestry, disability and family status.
Although it would be hard to prove, a potential buyer could claim he was discriminated
against because of a protected status disclosed in a letter or photo. “I think it’s asking for
trouble, potentially,” said Caroline Peattie, executive director of Fair Housing of Marin. “It’s
more problematic if you submit pictures. It’s not a dating game.”
Lotus Lou, a spokeswoman for the California Association of Realtors, said her group “has not
addressed this specifically, but we would discourage the practice.”
Kathleen Pender is a San Francisco Chronicle columnist. E-mail: [email protected]
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Blog: http://blog.sfgate.com/pender Twitter: @kathpender
Why I love your house
Like many buyers, Susan Giddens submitted a letter with her offer. Knowing that the owner
had also developed the condo complex, she emphasized “his design aesthetic and the layout,”
she said. Here is her letter:
Dear Home Owners,
Hi! My name is Susan Giddens and I just wanted to write you a quick note, introduce myself
and tell you how much I love your home. I am literally doing a dance inside with the hopes
that it becomes my home. I’ve seen many, many places across Oakland, Emeryville, Berkeley,
and San Francisco and there are a ton of great places on the market. However, when I walked
into your home, it took me all of 3 seconds upon entering to know “This is the one!” I would
be so happy here for many years to come.
I love the design and layout of the entire space. I feel like the builder was really thoughtful
about how the space would be used. I love that the space has the open concept yet at the same
time the kitchen is a little closed from the living space. I love that the deck is an open space
that is an extension of the closed space. It reminds me of how homes are built in tropical
areas. The size of the bedrooms with the high ceilings is fantastic.
Just a little about me, in case you’re curious about who is requesting to take over the love and
care of this amazing place. I’m a first time homebuyer (very exciting). I work at, what I think,
is an amazing company, a Bay Area biotech firm. I love what we do for patients across the
world. I feel like I get to contribute to the world in a way that really matters. I’ve lived in the
same place for 19 years in Noe Valley area of San Francisco but recently started thinking its
time to put down roots and purchase my first home. When making the decision to purchase a
home, I really wanted to find something that gives me the same feeling as my current rental
home. That is, a home that brings me comfort and peace; a home where I can invite friends
and family over for wine and cheese on a warm Sunday afternoon; a home that will keep me
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in the “cool aunt” category for many years to come. The environment, space, design and
layout of your home definitely meets and exceeds all my desires. I also make for a really great
neighbor. Over the 19 years in my current location, many of the people that moved into the
building have become good friends of mine.
In my spare time, when I’m not with family and friends (and sometimes with family and
friends), I love to travel! I’ve been to over 15 countries, which doesn’t even make a dent in all
that there is see and explore. I dabble in photography and hula hooping (I know, crazy!). I also
run half-marathons and crazy races (such as ROC Challenge - similar to WipeOut).
I appreciate you giving me a few minutes of your time to read my letter. I really do love your
home and if I am the new owner, I want you to know that I will love it and care for it. Its
really special to be buying my first home and it means a lot to have a place that isn’t just a
place to lay my head every night, but a place that has my heart.
Warm regards,
Susan
Kathleen Pender
Business Columnist
© 2016 Hearst Corporation
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