What's Your Story? - The Art of Buyer Merchandising

9/13/200610:33:43 PM Link |  | Add comment

Buyers, Home Buying, Real Estate

I get about 5-8 real estate magazines a month due to the various designations I have so keeping up with it all can be quite the task.  I was doing a little catch-up reading on Sunday, trying to move some of these magazines from my home office to the recycle bin, and ran across a little paragraph/text box in a December 2004 of Realtor magazine that brought out some thoughts I would share.

One of the issues you might face when you go to buy a home is the prospect of multiple offers.  Initially I was surprised at how often I even ran across this during the 'down' years in town.  The key fact , though, is that no matter what cycle a market may be in, a well priced (or even low-priced) property that just knocks your socks off has the potential to garner multiple offers.  If you are looking at the property in the first few days on market and you are 'wow'ed by it, there is a good chance that somebody else has been 'wow'ed, or will be 'wow'ed if you don't act fast enough.  (This is, of course, where knowing the neighborhood you want to buy really pays off because you can spot it as a great value for the area almost instantaneously and you can act without hesitation or remorse)

Sometimes a multiple offer situation becomes unavoidable if you really want to put an offer on a home.  In July of 2000, when the Austin market was last at its most frenzied, I actually had 7 different clients who made offers that month and were in a multiple offer situation.  None of them actually got the property.  That might not sound so great at first, but I just cannot, in good conscience, recommend that anyone overpay for a home just because of a market's irrational exuberance.  The fact was that the prices being paid for many of the homes at the time were not supported by any comparable sales.  Much of what was able to close at the time was due to loose lending requirements and large amounts of cash which minimize lender's risk.  I've always been of the opinion that it is my job to protect my clients and minimize their risk and the last thing I want is to receive a call from a past client a couple years after they've bought a home, saying they need to sell and then I find out they are upside down. 

But I digress! Ha!

Back to the point...

Sometimes a multiple offer situation is unavoidable.  However, sometimes the answer isn't just throwing more money at a situation.  Sometimes the way to move forward is by actually 'merchandising' you, the buyer. 

How can we do that?  These are all tactics I have used in the past:

• Tell your story - Think about it.  A contract is cold.  Negotiations can easily go hard-line.  However, when you write a letter about the seller's home and about you then the seller gets a greater understanding of who you are and becomes 'warmer' to you.  You could tell the seller what you really liked about their home.  You could tell the seller about how you can picture your family in the home or your own background.  It's no secret that most people would rather work with people they like, and the selling a home can be a very personal experience for a seller.  Knowing that the home is going to someone who will really appreciate the home can go a long way.
• Offer more earnest money - Instantly you are telling the seller, 'You can feel confident in me'.  The seller will feel better knowing that you have not only put in a strong offer, but that you weren't afraid to back it up with a large amount of earnest money.  This helps the seller feel you are a whole lot less likely to back out of the contract and, even if you did, the seller will stand to benefit from it.
• Offer something that is not monetary.  Do you have a service or skill that you could offer the seller that will only cost you your time, rather than money?  I actually have a great example of this.  Back in 2000 I had some clients that were involved in a multiple offer situation.  We really didn't want to go higher on our offer, but we suspected (and were right) that another offer was higher than ours.  One of the buyers was a relatively well know landscaper/gardening personality so he actually offered his landscape design service for the sellers at their new house.  The sellers took our offer.

There are other ways to strengthen any offer, regardless of whether it is a multiple offer situation or not.  These migth include:

• Limiting the Option Period (which is when most buyers in Texas have their inspections)
• Have your pre-approval in place so that you don't have any financing contingencies
• Reducing any other contingencies, such as the sale of an existing home
• Don't get stuck on any of the 'soft' terms, such as certain fixtures that may or may not convey

These thoughts might really begin to come in handy again here as the market slowly turns from a buyer's market back to a seller's market and we start seeing more and more multiple offer situations.    The more you can humanize and personalize a real estate offer and negotiations, the better it will work out.