By Huy Vu | Realtor®, Attorney, Palo Alto Buyer Specialist
In a hot seller’s market such as Silicon Valley, many buyers have undergone a bidding war and were rejected, at least once or twice. This process is not only frustrating and stressful, but emotionally draining on buyers. Buyers in such a market can get what they want without joining the race, but they need to have some winning strategies. One such strategy is submitting a winning “preemptive offer.”
A preemptive offer is an offer that is made before the seller’s designated date to hear offers, or before the property is listed on the Multiple Listing Service (MLS). In Silicon Valley, sellers generally want to expose their homes to as many buyers as possible in order to drive up the sales price through multiple offers.
Why would a seller accept an offer without the benefit of full market exposure? Wouldn’t they get more money if they wait for all the offers to come in to drive up the sales price?
There are several reasons sellers may want to sell without full market exposure. The key is understanding the sellers’ situations and crafting the offer in such a way that it would be impossible for the sellers to resist. For example, some sellers may feel the pressure to sell quickly because they already bought another home. Waiting several weeks and wondering if they’ll receive an offer, let alone a good offer, may be too risky for them. Some elderly sellers or sellers with small children may find the process of listing the home (e.g., home preparation, marketing, broker tour, open houses) to be disruptive and bothersome. Some sellers may not want or have the money to fix the home up before listing it on the market.
In these situations, a strong preemptive offer may entice the sellers into a quick sale. The emphasis here is a strong offer that not only meets the sellers’ needs, but exceeds their expectations. For instance, the offer price is strong, has a large deposit, no contingencies, and includes free-rent back to the sellers.
There are, of course, some drawbacks to submitting a preemptive offer. The home may not be turnkey, but then the home would be improved to the buyers’ tastes, and probably for a much lower total cost than what the home would have sold for had it been in a bidding war. The buyers may not know if they overpaid for the property, but then the sellers could have sold the property for more if they expose it to the public. The preemptive offer may be used to shop around for better offers from other interested buyers, but that is assuming the listing agent is aware of these buyers. Further, if it’s a strong preemptive offer with a short window for the sellers to response, the other buyers may not be prepared or have time to submit their offers.
Thus, in this hot seller’s market, to avoid the bidding war and the anxiety of losing out on the perfect property, the buyers should be decisive and be prepared with winning strategies to get their perfect home. Working with a knowledgeable, local real estate agent, such as a DeLeon Realty buyer specialist, is crucial.
The specialist will know the ins and outs of his or her particular neighborhoods, have excellent connections with the community, be aware of great opportunities before they even come onto the market, and be able to provide the necessary information and the right guidance to make the best financial decision. Most importantly, the specialist should be astute with strategies and ways to use the contract to craft winning offers for both sellers and buyers.