The Art of Winning a Real Estate Bidding War (Part 3) – The Beauty Contest
In this final blog of this series, I want to go over the aspect of getting the seller to know you – the buyer – in hopes of winning them over emotionally.
Before I get into that, I need to update you on a change that occurred since I published part 2 of this series wherein I explained the definitions of the property listing status. Fortunately, the multiple listing service has dropped the “Active Continue To Show” status designation and replaced it with two new status designations. They are: “In Escrow Showing” and “In Escrow Not Showing.” Also, mls rules require the listing agent to change the status from “Active” within 4 days of contract acceptance. This is a welcome change that will take a lot of confusion out of the status designation of listed properties.
Win Them Over Emotionally
Try to meet the seller in person. When I have a client who instructs me to prepare an offer on a chosen property, I ask them to write a brief bio that we can submit along with the offer. Of course the optimum way for buyers and sellers to get acquainted is if they physically meet. The buyer should have their agent set up a showing and get into the property as soon as it comes on the market – hopefully before the first open house.
If sellers are present during the showing, that is going to be the best opportunity to win them over emotionally. I let my buyers know that they should consider it a beauty contest and they should arrive at the property with the intention of making a great first impression on the listing agent, and hopefully the seller, if they are home during the showing.
Create a bio that makes a connection. Sellers will typically not be present during showings because they are not usually comfortable watching buyers walk through their home. Also, as a general rule, listing agents ask their sellers not to be home during showings and open houses. That is why submitting a bio with the offer is so important.
You should also include a picture in the bio. When viewing the home, you should look for any clues that will tell you what the seller’s interests and hobbies are. For instance, if you can see that the seller has a pet dog and surfboards, etc. and you also happen to enjoy surfing and dogs, then you should probably incorporate your pet and some water sports equipment into your bio and picture. This along with words such as, “We can really see ourselves living in this beautiful home that you have created…”
The seller of the home pictured below was a dog lover and there was a nice area of level fenced-in terraced land with a dog house on the up slope behind the home. My buyers owned a large dog, and that was the emotional soft spot that the buyers and seller shared. There were six offers on the home including ours and the seller chose my buyers.
Sold 12/9/2015 (MLS# 201518670)
Get to know the seller. As a caveat, you should make sure you have your facts straight about the seller before you attempt to tug at their heart strings. Get your agent to try to verify the seller’s situation, likes and dislikes. You never know, maybe the dog and surfboards belong to their live-at-home deadbeat adult son that they are hoping to ditch by selling the house. This is not a fictional scenario, I’ve actually witnessed this happen.
Personal Impressions Matter
I will tell you about another transaction that will give you some interesting insight into the personal impressions and emotional roller coaster that can occur during a home sale. Three offers came in on a home I listed.
The first offer was from a buyer who had a 20% down payment for a pre-approved conventional loan, offered $10,000 over listing price, and agreed to make up the difference in cash – up to $10,000 additional – if the property appraisal came in lower than the contracted purchase price.
The second offer was at the same price as the first; however, the offer was poorly written with several errors and contingencies that were irrelevant to the subject property circumstances.
The third offer was $20,000 over list price from a VA buyer, no down payment, and no reserve cash available to make up the difference if the home appraised below the offer price. I should add here that the comparable market analysis for the home indicated that it would appraise for approximately $500K, and that was the original list price that we put it on the market for.
It was a no-brainer. The sellers were going to go with the first offer and they instructed me to set up the documents for digital signature and would get everything back to me by the following morning. The next morning, the sellers informed me they had a change of heart and now wanted to go with the VA buyer.
There were three things that changed the course of the sale:
1. When the first-offer buyer came to the open house, the first words out of buyer’s mouth were, “Hi, I just came over to see my new home.”
2. During a phone conversation between me and the buyer’s agent, the agent said, “Your seller is lucky to be getting an offer with 20% down payment. I do a lot of business on this part of the island and most buyers in this area don’t have any cash for down payment.” One of the sellers ended up taking offense to those comments by the buyer and their agent.
3. The other seller had strong feelings about wanting to let the home go to the VA buyer.
I warned the sellers that they could easily end up with less money because the purchase price would have to be adjusted to whatever number the VA appraiser came up with. However, the sellers were adamant that their home should go to the VA buyer. So we put it in escrow, the home appraised at full contract price – setting a new benchmark price level for the neighborhood. The buyer and sellers were elated and we closed.
Now, I should tell you the sellers were original owners of this relatively new home and it was in immaculate condition. The home and yard were in better condition at the close of sale than it was when they originally purchased it. The pride of ownership was very apparent.
After it closed, I still had to go to the home and remove the lockbox from the front door. I rang the doorbell to say hi to the new owner but no one was home, so I proceeded to remove the lockbox, and I could hear a dog barking on the other side of the door. And that was it. I left with my lockbox.
Later that evening, I was on the phone with one of the sellers as they asked me to call after my final visit to the property. So the seller was asking me how everything looked because he was still emotionally attached. I told him everything looked fine from the outside but the new owner wasn’t home so I did not see inside the house – and I mentioned that I heard a dog barking on the other side of the door. The seller said, “Oh no! Are you telling me they have a dog in the house?” He did not like that. Then he told me, “Please don’t mention this to the other seller because they will be really upset. They never would have chosen that buyer if they knew that a dog would end up in the house.”
As the late beloved SNL comic star Gildna Radner used to say – “So, it just goes to show, if it’s not one thing it’s another.” Definitely a lot to be learned from that sequence of events.
Walk Away With the Prize
Buying real estate can sometimes feel somewhat like a beauty contest, but with the right guidance and proper preparation, you can improve your chances of finishing on top. I hope this series has been informative for you and covered some important aspects of the art of winning a real estate bidding war.