Walk Away a Winner – Negotiating in a Hot Market
If you’re a buyer in a very hot market, here are some tactics you can use to get the house you want.
It’s the early bird that gets the worm in a hot market. Often if your offer gets there before others, particularly if you’re a day or more ahead, and have the financing all arranged (see above), the seller may accept it. Wait and competing offers may come in, some better than yours.
Show That You’re the Better Buyer
Use a preapproval letter specifically designed for your offer.
Write a Letter to the Seller.
Used increasingly in bidding situations, the buyers explain why they should get the home. If you use this tool, don’t whine and don’t complain. Talk about how much you like the house, how it would be a good place for the kids to live, why it’s close to work, and how you would cherish it. Don’t get too mushy, but try to win over the seller’s sympathy. Maybe they were once a young couple like yourselves, hoping to get into a home they could barely afford. Maybe they’ll pick your offer over a better offer because they like you.
Jump the Price.
If warranted by market values, make your bid significantly higher than the competition. If your house is priced at $500,000 and there are other bidders, come in at $520,000. It tends to freeze out the competition, who suddenly see you as a “big roller” against whom they can’t compete. Just remember, don’t go over market value.
In competitive bidding, the buyers are not supposed to know what the other offers are. However, very often agents get this information and pass it along.
Insist That Your Offer Be Presented in Person.
In hot markets, agents tend to just fax in offers. That doesn’t do you any good. Your agent’s making a fat commission on the sale if it goes through. The least he or she can do is insist on presenting the offer in person. This makes an impression on the sellers, particularly if the agent can give your offer a “face” by delivering to the seller your letter that explains who you are and why getting this house is so important to you.
Try a Deadline.
When there are multiple offers, sellers will often sit back and take their time deciding, hoping that even more and better offers will arrive. Make your offer the best one and then insist the seller give a “yea” or “nay” immediately. If the seller refuses, con sider moving on.
Locate the “Lost” Seller.
In some markets, your agent will explain that your offer can’t be presented because the seller is “out of town and unavailable.” Some sellers will “list and leave,” coming back a week or two later to, hopefully, a bunch of offers. The truth is that anyone on this planet can be reached in a few hours by phone, fax, FedEx, or some other means . . . unless they don’t want to be reached. If that’s the case, then look for another deal since you’ve got no seller to work with.