By Bruce Cathcart
Spring has definitely sprung here in the desert and with it comes the amazing desert flowers, festivals and “snowbirds”. It is also the height of our “Selling Season” here in the Coachella Valley which means that more buyers will be competing for the best properties as they come on the market. This is what typically happens around this time each year. You and your trusted real estate agent have been shopping for your desert dream home for several months and finally the perfect home in your price range comes on the market. You race out and see the home and can’t wait to get back to the real estate office and write an offer. Before your agent writes the offer he/she calls the listing agent and is told that there are already several offers in on the property. The listing agent says there is still time to get your offer in but recommends that you submit your “highest and best offer” as you will likely only get one chance at getting it accepted. What can you do to make sure your offer has the best chance of getting accepted?
First let’s take a look at the sales data for homes in the Coachella Valley for the month of March and then I’ll share with you the top 3 secrets that I have learned over the past 35 years on what you can do to greatly improve your chances of getting your offer accepted when there are multiple offers on the home you want.
According to the Desert Area MLS as of 4/1/17 there were 1,268 pending transactions of residential properties here in the Coachella Valley in the month of March. That’s up from the 969 pendings in the previous month (February) and up 17% over the same time last year when we had 1,054 pending sales. In February there were 710 solds and we were up considerably in March with 1,047 solds. This too represents a huge increase over last year when we sold only 849 homes in March 2016. We ended our first quarter in 2017 exceeding last year’s sales by almost 20%. This is our third year in a row that we have started off with higher volume of both pendings and solds. This is an excellent trend for our valley and even though I estimate that the majority of the homes here in the Coachella Valley are still about 20% below the high market values that we experienced in 2006-7, this positive data documents that the Coachella Valley real estate market continues to improve. Our inventory of homes for sale was down this month with 4674 homes available on April 1, 2017 compared to 4,929 homes available on March 1, 2017. The large number of homes that went into escrow (pendings) in March is obviously responsible for this decrease. We still have plenty of inventory out there at this time, but we’ll be keeping a close eye on this situation to see it becomes a concern.
Secret #1: In most multiple offer situations, but not all, the highest price offered wins. The most common mistake I see buyers make is to base their highest price on the listing price. One of the reasons the property is likely to have multiple offers is that it is priced too low! So if a home is listed at $250,000.00 and it is worth $300,000.00 don’t offer $255,000.00 and expect to be the highest offer in. The secret in this example is to pay what the property is worth… plus a little more. My magic number for the plus a little more is $126.00, so in this case I would offer $300,126.00. Experienced investors will usually add $100.00 or even $125.00. That is why I suggest the $126.00.
Secret #2: An all cash offer, even if it is not the highest price offered will oftentimes win the bid. So what can you do to improve your chances if you do not have all cash and getting a loan is part of your offer? Make sure that you have a strong Pre-APPROVAL letter from a reputable lender. This is very important. You do not want to submit your offer with a Pre-Qualification letter that is subject to a long list of things still to be done by the lender. You want the seller to see that if he accepts your offer the financing is NOT going to be an issue! The pre-approval letter should be subject to the appraisal and clear title… and that’s all. Now here is the real secret, have your lender call the seller’s agent and assure him that if your offer is accepted the financing will not be a problem. This can sometimes get a seller to accept your offer even over an all cash offer if your price is right.
Secret #3: Make sure that the offer you submit is complete and written in such a way that it does not require a counter offer from the seller. When I am a listing agent in a multiple offer situation and I receive an incomplete, hastily drafted offer it tells me that the agent I am dealing with is not very professional and not someone I want to work with. As for writing an offer that needs no counter offer, just make sure you create short inspection times, do not ask for negotiable items (like a home warranty or NHD policy) to be paid for by the seller and when it comes to choice of services insert “Seller to designate”.
If you find yourself in a multiple offer situation please consider sharing these secrets with your trusted real estate agent. Hopefully these tips will help you to write your highest and best offer that will end up being that winning offer on your desert dream home.
Join me each month this year as we keep a close eye on our Coachella Valley real estate market. If you have a real estate question or concerns please email me at the address below.
Bruce Cathcart is the Broker/Co-Owner of La Quinta Palms Realty, “Your Friendly Professionals” and can be reached by email at firstname.lastname@example.org or visit his website at www.laquintapalmsrealty.com.