Does 10 offers on a single home sound like a lot? How about 20? That’s pretty standard in the Seattle residential real estate market these days. Some of the most desirable homes are receiving dozens of offers.
With so much competition out there, how are real estate brokers making it past the finish line? These days, brokers are trying just about everything they can think of to come out on top.
While some tactics might be outside of most buyers’ budgets — agents we spoke with have heard of buyers trying everything from including college tuition for the seller’s child to throwing in a free speedboat or paying the seller’s club dues to sweeten the deal — some more practical approaches.
We spoke with top agents in the Seattle metro area — Jill Petersen, Coldwell Banker Bain; Lisa Molinaro and Marianne Barkman, Molinaro-Barkman Team at John L. Scott Real Estate; Heather Maddox, Windermere Real Estate; and Eleanor Payne, Realogics Sotheby’s International Realty — to learn how they’re winning bidding wars.
Get your client ready
Windermere agent Heather Maddox told Seattle Agent that preparing your clients with some straight talk can help the entire process go smoother — that means setting realistic expectations for eager buyers. “Spend time counseling your buyers on what a winning offer looks like before you even start house hunting. With proper planning and coaching of your clients, you will prevail,” she said.
Marianne Barkman and Lisa Molinaro, both at John L. Scott Real Estate, voiced a similar bit of advice. Molinaro said that around 90% of the homes sales they’ve worked on have had multiple offers, so being prepared is crucial. “Everyone we work with, we coach them and get them ready to compete,” Molinaro said.
She added that in such a hot market, some sellers are overly ambitious in their expectations, which can come back to hurt them later. Some have the idea that they’ll make all the earnest money nonrefundable and waive all the contingencies and keep moving up the price, she said. “But if that seller (has to take it off the market and then) puts it back on the market, they aren’t going to get the same activity and excitement with that property again,” she explained.
Clean offers can help
It’s not uncommon these days for buyers to waive a number of contingencies that are normal in the homeselling process, according to Jill Petersen at Coldwell Banker Bain. Waiving inspection reports, appraisals and agreeing to pay the seller’s closing costs are a few of the offers buyers are making, she said. “It’s like an arms race,” she noted, with buyers and agents looking for anything they can cut out of the deal to make it more enticing to the seller.
Some are even agreeing to release the earnest money, which is usually held in escrow, to the seller before the deal is complete, but that can be a risky move if the buyer has to back out of the deal, Petersen said.
She explained that the amount of earnest money is increasing in some deals — those amounts were 2.5% to 5% in the past, but she’s seen them climb as high as six figures — which gives buyers more skin in the game, but it’s not a decision to be made lightly, Petersen warned.
A strong understanding of the local market also helps when determining how far you might need to go to close on a home, according to Barkman and Molinaro. The Seattle market is so competitive that the value of homes can change from block to block — that’s why Barkman and Molinaro conduct a market analysis on the street to determine what makes the most sense when making an offer.
Barkman said looking at the “micro-market” means checking comparables within a half mile or a quarter mile for the last 90 to 120 days — sometimes the last 30 days. That’s a deeper level of analysis than you’d get from appraisers, which typically analyze a 1-mile radius over the last six months. “Good old-fashioned communication really helps,” Molinaro added, noting, “It’s really like doing the work for your buyers. You don’t want them to overpay in this crazy market.”
A clean offer can also mean making it as easy as possible for the seller, according to Maddox. “Spend time making sure your offer is written in a way that the seller would be able to just sign it and go pending,” she explained. “Any error, extra form or unnecessary contingency could require a counteroffer, which could, in turn, cost you the house.”
Eleanor Payne, with Realogics Sotheby’s International Realty, tells Seattle Agent that the most important thing you can do to win multiple bidding wars is build strong relationships with colleagues in the industry. “How strong is the buyer’s agent’s relationship with the listing agent? The reason that’s important is because there are always small advantages to be had with those connections,” she said.
A seller who prefers a longer closing or wants to rent back the property or other small factors can make or break a deal, she said. “The only way to get that sort of information and insight is to have a relationship with the listing agent,” she said.
Payne said it’s so important to her business that she spends 20% of her time working to develop relationships with other agents. That entails reaching out and mentoring new agents, collaborating with agents to help them with their listings and contacting them regularly to compliment them on above-average listings. “If an agent has a beautiful listing, I tell them they did a really nice job,” she said.
Maddox also said that in real estate, building strong professional relationships can be your ace in the hole when it comes to winning a bidding war, noting that the agent on the other side of the deal has great influence with their selling client.
“The best thing you can do for your offer in a bidding war, outside of the terms, is to befriend the listing agent. Make them want to work with you,” she said.
Professionalism is key
Before you can win a bidding war, you need clients. And many are finding themselves stuck with unprofessional agents. That might be a pox on the industry but provides an opportunity for hardworking agents.
Payne said this year alone she’s worked with more clients than ever who had a bad experience with a previous agent and decided to jump ship. “Clients have the expectation that they are dealing with a true professional who sees themselves as having the same fiduciary duty as anyone else providing financial and professional services to them,” she explained.