If you have read my other posts on bidding wars and putting in offers to buy Virginia, MD or DC homes for sale, you know that I obsess with the art of negotiations. How you put in an offer matters. Want me to prove it? I can send you a 20 minute, non-public raw video I made of an analysis I did for a 7 contract bidding war. We were on the listing side. I compare and ridicule the 7 offers. You can then see how to make your contract stand out and see me yell (at the screen) for not-so-sharply written contracts and how that hurts the client. This shows you what not to do. It shows you a spreadsheet analysis and how to make your offer the best in each column… except maybe the price. I prefer my clients win with the lowest offer or at least not the highest offer. (this private link is only for people not currently working with an agent)
Back to deadlines. I don’t like them. Why? Experience. Seems logical to put in an offer and put a deadline of X days or X hours. Logic won’t win you a home for sale in a seller’s market.
The problem with Deadlines
1. If you give somebody until Tuesday at 3:30pm, the tendency is for the home seller to wait until the entire time. A get out of jail free card, a cart blanch no stress, “we have until Tuesday at 3:30pm” to reply. The buyer sees that as the maximum time to reply. The seller sees it as the minimum time to reply.
2. During that deadline timeframe, they shop your offer. Lets say they were going to get back to you on Monday, but, you gave them an extra day to run up the price.
3. Weakness. A deadline can show weakness. When I get an offer that says to reply by X, they tend to be more desperate buyers. I use this sometimes to get my clients more money on the listing side. So on the buy side, sometimes playing it cool is better
4. Put a fast deadline? Sometimes, but pissing off the seller is also not helpful. So it is a fine balance.
On the Flipside, an example of when a Deadline WAS used.
Here is a client testimonial video where a deadline WAS used to beat out others in a bidding war, before the war could start. Amazing story if I may say so myself. The point? Every deal is different and will your aunt who might be a Realtor, do this for you?!
Tips with Deadlines if you decide to use them
1. Things always take longer then they logically should. So first ask the other side when they think they can review the contract. Then if they say tonight at 7pm, your deadline of 10pm or the next morning seems reasonable.
2. Avoid difficult times like 5pm. People work. Putting a deadline at the exact minute that people clock out… maybe not ideal.
3. Consider starting with no deadline and if things are slow, adding the deadline after the fact
4. Consider reminding the home seller that you have the right to withdraw the offer at any time. Even though this is technically the default, adding that makes it more clear that you might remove it if they wait too long. You remove the security blanket of having all the way up to the deadline with no risk.
What to do when we get a deadline, if you are the seller.
1. Remain calm! Too frequently a deadline will freak out a client. It adds stress.
2. If you are not accepting the contract, there is less of a need to counter within the deadline timeframe. A counter kills off the contract anyhow, so no need to rush to their timeline.
All of this stuff matters in winning bidding wars and ultimately trying to help a client get the best and lowest net on a home. When picking a Maryland, DC or Virginia Real Estate agent, sure you can get a “deal” elsewhere with a discount or rebate, but will your Rebate agent do this? If so… hire them.
These suggestions are general. There is no “So you never use them.” Each deal is unique. Strategy is of utmost importance. So sometimes yes, sometimes no.
If you are sick of losing deals or want to get off on the right foot from the beginning, please reach out to me about where you are looking to buy. Reach out early! As in 3-6 months before you THINK you might be interested in buying.
Frank LLosa Broker
Frankly Real Estate Inc (please report typos)
Blooper reel video on why NOT to use a Deadline in a Real Estate purchase.
Update 1/15/2014: Listen to the unplugged version of the show
Tune in for a 1 hour interview on the Real Estate Radio Washington show. Learn how Igot started in Real Estate. How I became the #1 agent in America, under the age of 30, in my first year… (self proclaimed). We also talk about “Buying a listing”, How I found my wife on Match, so finding a Realtor online shouldn’t be that big of a deal. It will be fun.
If you miss the show, I will try and get the audio and post it here. But it is much more fun to listen on air. Saturday Dec 14th at 10am station 1260 AM dial.
(welcome FranklyMLS members, to remove just reply REMOVE)
P.s. Did you know that statistically you can do just as well selling your home a week before Christmas, as you can a week after the New Year. Ask for my detailed analysis of the data.
P.s.s. Random image of the month. At airport with my scooter luggage, the 2 boys and 3 carry on bags.
Update 7/10/2013 Just got PreMLS.com and have launched in 6 cities in the US.
The legend has it that once upon a time there was one book per real estate office that had each real estate home for sale. Likely updated MONTHLY! Then the data moved to computers, but only for agents to see, and then the data went online where the agent OR the buyer could check it WEEKLY for new homes.
Then consumers demanded faster, so Realtors got fancy and delivered DAILY email alerts for new listings. That was earth shaking. But that wasn’t good enough. Sites like FranklyMLS.com started offering nearly INSTANT ALERTS for new listings. Beating out other buyers.
But now the time has come. To be even faster. Even more Instant-er!
Are we talking mere seconds? No. How about going Back to the Future and knowing what will be on the MLS BEFORE IT HAPPENS!! And in a large quantity! Possibly 10-20% of the marketplace one day.
How is that possible?
Consumers demanded it, so Frankly made it, and the Agent community embraced it.
A FREE agent-only Facebook forum for Coming Soon homes! Over 1,000 agents and dozens of brokerage firms have joined in the last few weeks alone. 100s of homes (literally) have been added to the forum. I thank all the agents that have helped grow it to the size it is today and will be in the future.
Is this idea new? Kind of. But not. Going back to the prehistoric times of the book in the office, another Coming Soon was commonplace. At the traditional Tuesday meeting, all the agents would go around the room and verbally share what that agent has coming soon. Sometimes this is referred to as a POCKET LISTING (that phrase has 10 definitions depending on who you talk to, also called Private or Exclusive Listings see L&F talk about it sometimes being bad here, this new service is NOT the bad type).
This new coming soon forum is a virtual version of the office stand up and announce system, but across 50 brokerage firms and 1,000 agents (hopefully more after this).
Before some of you Freak out! Let me preempt the common agent misunderstandings:
1) It is against MRIS (the local MLS gatekeeper) rules to advertise coming soon homes.
Reply: Nobody has yet to show me exactly where this rule is. It doesn’t exist as far as I can see. If it did, then the decades long process of standing up in the office and announcing what you have would be “illegal.” Or those “coming soon” signs sold at the local associations would be like selling Marijuana pipes and claiming it doesn’t increase pot smoking.
Oh, and MRIS hosted a Coming Soon forum last week, so there goes that argument! D’oh!
2) One pissed agent posted: “A listing agent representing the seller in this market is doing the client no favor what so ever [sic] to sell it before putting it into the MLS period.” Actual quote!! This guy was pissed. I love the “period.”
Reply: First of all, this agent works for a company that does the stand up announcement of coming soon listings and was not seen performing ear muffs or running out of the office when agents were verbally sharing homes coming up. Secondly, this person didn’t read the rules and suggested use. The PreMLS postings (unlike the MLS that requires a home be immediately available) does not mean you have to sell it before it hits the MLS. Heck you don’t even need to allow showings before it hits the MLS! Some might say “well then what good is that.” Easy to answer by one replier to the above commenter that stated “Sellers love the idea of generating pre-market excitement about their listings”. In this marketplace homes sell in 2-3 days. That is crazy! Do you think 100% of buyers get to see it? No way! It is hard to even schedule a showing that fast (for some firms, not us). So why not let 1,000 agents get a heads up that a hot home will come up in X days. Put everyone on notice to not go out of town, or whatever.
Or others might welcome showings before it is on the MLS. Why? In this market?! Well, many reasons.
a) Not every home sells immediately in a bidding war, the average is still like 30 days.
b) The listing agent can use the looming MLS listing like some use the 1st open house with a “we want X or we will post it tomorrow on the MLS.”
c) Some don’t want their home swarmed or pillaged by strangers. Have you seen this video? If a buyer wants to offer cash and full list, or heck $25k to not list it… the seller might just like that. It is all negotiable, and having a great agent to navigate that, matters.
CONSUMER QUESTIONS (all in all every consumer I have spoken to loves it)
1) Why isn’t this public?
If the home was ready for the public, it would be on the MLS and the MLS doesn’t have a “Coming Soon” system (it does have Temp Off, which your buyer agent should know about! but we are not allowed to show those on FranklyMLS or any site). And sellers don’t want to be bombarded by potentially unqualified buyers before they are even ready- that’s why i said sellers would want the info shared only with Realtors.
Some agents do already post coming soons on Craigslist or with a “Coming Soon” sign in the yard (A warning, is the agent putting the CS sign in order to try and get a double commission? Just make sure all of their actions are being done for their client’s best interest, and not for the agent). Bottom line is, if the agent and seller wanted it public, they would, but they usually aren’t, so in this forum they feel comfortable sharing the heads up to other agents, so it is thriving.
2) As a buyer how can I learn about the homes?
Ask your agent!! Have them Facebook friend me over at www.Facebook.com/FrankLLosa and ask me to add them to the NoVa group, DC group or MD (Montgomery County). And of course (come on, I have spent 100-200 hours on this, I can do one little plug) if you don’t have an agent, nope, we are not too busy for you. See Video to prove it, and reach out.
3) As a seller how can I make sure my home is added?
Ask your agent to put you on there!! I also recommend posting the home immediately upon signing the Listing Agreement. Just the basic details such as “Coming Soon Arlington Condo 22201 in Clarendon 1021, 2 bdr, low $600s, photos to come later.” or more details if you want. In the comments photos and exact price can be added later (it moves it to the top).
We ask that it not be a one way street. While an agents doesn’t have to put ALL of their Premls listings on there (because each home and seller is different), I don’t want agents just using the forum for their buyers and not sharing their listings. Otherwise the group will never grow and the goal is to get 10-20% of ALL MLS homes to be listed here first. This is a hard feat. Other tidbit: the forum isn’t for Rentals, Want ads, or already listed homes and Open Houses.
I know some don’t get it or appreciate this, but this was done to initially help our Frankly clients. Help them not settle for that wrong house when the perfect house might be hitting in 2 weeks. I obsess about helping our clients, but I believe this will help everyone.
Love to hear your comments! Nothing worse than somebody walking up to me during cherry picking (true story) and saying “I have read all your blog posts before I bought, they were great,” to which I reply “not great enough, if you didn’t hire me”, and after the awkward silence, I laughed “No problem, but next time you like a read, at least add your comments, or retweet, nobody likes a quiet post!”
Update 10am: We have our first official sale! 100% premarket. We have had reports of tons of premarket showings, but I hadn’t heard of a sale until today! If you aren’t on here… you are missing out!
Written by Frank Borges LLosa Esq. and not some ghost writer.
Principal Broker Frankly Real Estate Inc MD DC VA
Attorney only in NJ
Favorite photo yet of my sons Tayo 6 mo (next week) and Hartly 3 years last week.
Ps. Upcoming post on how the registered portion of FranklyMLS is no longer open to those with another non-Frankly agent (see video).
P.p.s. Please report typos.
Dear Listing Agent,
You were sent a link to this post, because a Frankly agent has submitted an offer to buy one of your coveted listings. We understand you may have several offers, but we hope you will consider the reputation and technological abilities of our firm, as the agent might be just as important to getting a deal closed on-time and as promised, as the buyer’s ability to buy.
While our offer might not be the highest in price, it is realistic and likely the cleanest offer you have seen. Still undecided? If necessary, know that our use of technology also allows us get you a written and signed response to any written counter in 15-20 minutes, vs the average agent’s 3-6 hour delay. So what do you have to lose to give us a shot?
Here is a video testimonial from the listing side of a recent 5 offer bidding war that we won. We had a super clean offer, we did what we said we would do, we did not renegotiate, and we closed on-time.
Thank you for your consideration,
Frank LLosa Esq.
Principal Broker Frankly Real Estate Inc.
Attorney at Law, only in NJ
My buyers were US military and buying sight unseen from China, they contacted me 100% from my website. They picked me over “another Realtor I was considering, he was really cute, but I like your spunk.” I wondered if I should be offended for basically being called ugly.
Also their last experience years ago with a Realtor was a bad one, a USAA recommended Realtor that they fired mid-deal (those Realtors pay kickbacks to USAA, thus newer agents gravitate to those programs).
They entrusted me to be their eyes and I took buyer agent photos and videos of properties to make them feel as if they were there. They loved this home and it was UNDER their max budget. The only problem was the 4 other offers AND they had a VA loan which is historically much more difficult to win a bidding war (the appraisal system is tougher and there is much less money down vs conventional 20-25% down buyer).
In this case our offer focused on clean terms, not on the highest price. Actually we were $35,000 lower than the highest well qualified buyer. Many factors led to us winning. Perhaps one was the sellers thinking I, the buyer agent, was courteous (see video). Another was how we write our offers to instill confidence and low stress for the seller, and lastly the use of technology. In this case text messaging, I was able to get a last minute text message to the listing agent that literally stopped the signing of another contract in its tracks. They pivoted and gave our client a shot and we accepted.
We proceeded to follow through and not renegotiate, like many wild offers tend to do, and we closed on time and in a stress free manner.
Just like this client, we are never too busy for you, hope you will contact me with the area and price you are looking in.
More and more I am seeing the technique of purposefully underpricing a listing in order to create an artificial bidding war. It is a very tempting pitch from your listing agent, but don’t fall for it! They may want you to underprice in order to sell your home quickly and to move on. Their goal might not be to net you the highest amount. And it doesn’t work, in my opinion.
Example (ass described in the video)
Listing 1, our listing. $429,000, sold for $432,600 or 101% of list.
Listing 2, not ours. $399,000, sold for $433,000 or 108% of list
One might initially think listing 2 did better. However, #2 was listed a month after #1 went Under Contract fast (so they should know that it went near full price, and newer listings in an up market tend to ask for about $2,500 more). Listing #2 was nearly identical, but two floors higher plus a fireplace. Two floors is about $6,000 in value, a fireplace, maybe $2k. Yet they only got $400 more on a place worth $8,000 more. The result of underpricing to create a bidding war… a loss of $7,600-$10,000 in value. Oops!
Why doesn’t it work? Bidding War Exhaustion ™,is what I call it (see Video at minute 4) . Buyers have a mental block for going over a certain % above list. Even though I frequently tell buyers to ignore the list price. Why take guidance from the listing agent who might not have a clue about the area.
IGNORE LIST PRICE! (sometimes)
I would rather you bid up a place $10k over list on $20k underpriced home then bid down $50k on a home that is overpriced by $80k. And for those of you that say “Oh no way man, I’m not getting involved in a bidding war” you REALLY need to talk to me. If you don’t want to buy this year because you think it is a bubble 2.0, that is fine, I wont argue (don’t miss the blog post “Lose $40,000″ the moment you buy a $500k home).
But if you are going to buy in the near future, that approach may cost you money. What, you are going to do? Wait until the NEXT house hits for $10k OVER the post bidding war price of the one you lost? Well that one will get bid up too, and you might be $25k worse off.
More buyer DC area bidding war tips here including one crucial tip only supplied if you email me directly, or via a comment.
- It almost always takes at least 2 buyers to sell a home. One to low ball and one to get the other off the fence.
- Don’t believe ads that guarantee a bidding war or show stats that on their face might seem impressive. When in doubt, send them to me. If it is the real deal, I will tell you and probably recommend you go with them!
(more bidding war tips for sellers and a video here)
Thanks! Don’t forget to subscribe to this blog (upper right corner of Blog.FranklyRealty.com) and get sneakpeaks on future blogs by watching and subscribing to www.youtube.com/FranklyRealty I now tend to start with a video blog and follow with a written post.
And comment! The last post got tons of direct emails. Instead ask your questions here and your comments. Even if there are short. A blogger loves a conversation.
Written ghostwriter-free by: Frank LLosa Esq. who is never too busy for you, just email me.
Principal Broker for FranklyRealty.com
Attorney at Law, only in NJ and the above is not legal advice, in part because you didn’t pay me.
p.s. Anybody want to see me make a horrible attempt at a real estate rap video? Stay tuned.