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Whether one is considering buying, selling or leasing a property, there is usually much to be gained, and nothing to be lost by placing an offer. If fact, not placing an offer is one of the most common mistakes in real estate.
Most buyers know that they need to place an offer if they like a property, but they often fail to place the offer in the most effective manner. Most sellers recognize that they must place an offer first in the form of a listed price. Unfortunately, many sellers do not know that they (or their agent) can benefit by placing an offer even before that in the form of a pocket listing notification. Not all renters are aware that they may place an offer of less than asking price for a rental.
Just this week, a Downtown real estate team received a call from an agent who said “I see you are looking for back-up offers. My client is still interested.” That is helpful to know, but not nearly as powerful for the buyer as placing an offer early. Most real estate agents are more likely to keep that buyer in mind if the buyer has submitted an offer because real estate agents are legally and ethically required to submit the offer to the seller and to then keep the buyer in mind if the buyer has placed an offer. Also, agents assume that the buyer may not be financially or mentally ready if the buyer is not placing an offer. All too often, however, the buyer is simply waiting to see what other buyers are doing because they are afraid or not mentally prepared. Sometimes this is because the buyer is not aware that placing an offer carries virtually no cost and no risk in California. The offer usually comes with three contingencies, plentiful opportunities to cancel without risking the earnest money deposit. And there are normally no fees for placing an offer and then canceling soon thereafter. If an interested buyer fails to place an offer promptly, they give up a chance to the other buyers to buy the home outright. Almost half the time, sellers quickly accept an offer they like without giving other potential buyers any notice.
It is counter intuitive to buy a property before seeing it, but investors and other advanced buyers are aware that an early offer give many advantages, usually with no risk. In today’s real estate market with a low inventory and plentiful buyers, an offer can sometimes in fact be the first step. For instance, if a listing looks good, and the seller cannot show it right away, then the buyer may place an offer with a viewing contingency. There is usually no risk to doing this. By placing an offer immediately, the buyer immediately gets more attention from the seller, and can then gain more information about the property, along with a lower price. If the buyer turns out not to be ready to purchase that property at that time, then buyer can benefit because the seller is more likely to follow up later with that buyer if the other buyers should happen to fall out of escrow.
If you think that placing an offer before seeing it is very advanced, how about placing an offer before the property is for sale. Yes, the unsolicited offer is used by the most advanced investors, agents and buyers to create listings that do not yet exist. By sending letters indicating that a particular buyer wants to buy a home to homeowners in a desired condo building or neighborhood, the buyer can get access to a desirable home in the buyer’s pocket before other buyers have a chance to nab it.
The slow buyer is much more likely to fail in a hot market. When a buyer takes a wait and see attitude, they may also allow more buyers to come along to drive the price up. By placing an attractive offer early, the buyer has a chance to take the property off the market before higher offers come in.
For sellers, placing an offer is often most beneficial when it comes before the property is listed on the MLS. By placing a pocket listing first, the seller can find out what is really happening in the market, advertise the property without disturbing tenants, appeal to the wealthy segment of buyer who are looking for an exclusive deal, and gather sale momentum without leaving the property on the MLS to long. The pocket listings thus helps the home to avoid being labeled a problem listing on the MLS while making the home appear to sell faster. If done skillfully by an agent with large database of buyers, the pocket listing can help the property sell faster and for more money.
Sometimes renter feel less empowered against the mighty landlord, but renters also have the power to place an offer rather than just accepting the listed rent at face value. As with buyers, a renter can always ask if there are other offers or applicants before deciding how much to offer.
LOFT & CONDO LISTINGS DOWNTOWN L.A. [MAP]
Realty Source Inc, BRE#01889449