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Transcript of "Redfin South Coastal OC Multiple Offer Class"
Redfin’s Multiple Offer Class
Host: Rob Brandon
Presented by: North Coastal OC Team
April 16, 2014 ~ Irvine, CA
● Why All the Multiple Offers?
● Getting Ready to Make an Offer
● Writing a Winning Offer
● Earnest Money
● How Redfin Helps
A Little Bit About Who We Are
Redfin is a real estate brokerage that has helped over 20,000
people buy or sell a home; 97% would refer us to a friend.
● Customers, not commissions
● Informed decisions
● Right home for the right price
Why all the Multiple Offers?
What’s driving the sudden demand for homes?
● Interest rates still at historical lows
● Recent IPOs - “Paper millionaires” have cashed out to buy
● Foreign investors, all-cash buyers
● Buyers are not shying away from bidding wars
● Low inventory:
► Months of Supply – The time it would take to sell through all
the homes on the market, given the current pace of sales
► In a balanced market, Months of Supply is between 5-6
months. Anything less is a seller’s market
What Trends Are We Noticing?
● Homes are being listed at strategically low prices
► So properties are selling way above list price
► Base your offer price on comps & trends – NOT on list
● Deadlines are being set to accept & review offers
► Sellers usually review offers after about 7 days on market
► To give property exposure and create buzz amongst
● Multiple offers are not only against 3 or 5 buyers, but more
like 10, 20 and sometimes even 30 others
● Some buyers are waiving their inspection contingency
5 Tips for Winning a Bidding War
1. Make the competition eat your dust
2. Get pre-approved with a local lender & get underwriter
3. Start the conversation early
4. Write a letter & appeal to the seller
5. Know your limits
Obtain a Pre-Approval Letter
● Your Lender is part of our Team!
● Ask your loan officer how they can help you in a competitive
situation (shorter contingency period, quick closing?)
● Request that your LO be available to speak with the listing
● Get a preapproval letter with your maximum approval
amount, you can customize later if necessary
● Use a lender with local expertise- in a competitive situation it
can be the difference between winning and losing
● Get full underwriter approval --No pre-qualification letters
Let’s Do our Homework
● Buyer’s agent should call the listing agent, to find out what
the sellers situation is & why they are selling
► What are the sellers’ motivations?
► Will they need to remain at the property after closing?
► Do they need a quick sale?
● Request for copies of disclosures and reports
● Find out how many disclosure packages have been sent out
to other buyers, has there been heavy traffic?
● Is there an offer due date? How should offers be submitted
– via email, drop off at listing office or in person?
● Build rapport with listing agent and check scouting report
Know the Numbers
● Knowing what to offer and being confident in your offer price
makes the process less stressful.
● Run a Comparative Market Analysis (CMA) - understand
pricing for the area
● Determine your maximum price
● Calculate payment difference at incremental price points
Example: $5,000 more equals $?/month
● Know when to walk away - you can’t control what someone
else is willing to pay
● Having your finances and other required documents in order
prior to making an offer can accelerate the process. Here’s
what we’ll need at a minimum to include with your offer:
● Pre-Approval Letter
Not a pre-qualification
● Proof of Funds
Bank statement, 401k, brokerage statement
● Earnest Money Deposit Check
Just a copy (picture, scan or fax)
Writing a Winning Offer
Offer Price - Price & Terms are the King & Queen of
Winning in Multiple Offer Situations
● Study Comparables
► Understand pricing trends in the area
► Base your offer on the comparables – not the listing price
especially if it is strategically low
● List Price to Sales Price Ratio for the Area
► How much negotiating room is there?
● Days on Market
► Fewer DOM – sellers are less flexible
► More DOM – sellers are usually more motivated/open to
● Know the Sellers Current Loan Situation
Writing a Winning Offer
Highest & Best
● In a multiple offer situation you may have only one shot at
offering and no opportunity to further negotiate
● Blind betting – you don’t know what the other offers are
● What is the maximum price you are willing to pay for this
● How much do you really want this property?
● Determine your walk away price
● Go in with your Highest Price and Best Terms right from the
Writing a Winning Offer
Terms - Understand & offer the terms that seller desires
● Contingencies protect the buyer and gives the option to
negotiate further, or cancel the transaction if no agreement
► Inspection Contingency – Typically 7 to 12 days
► Financing Contingency - Typically 14 to 17 days
► Appraisal Contingency - Typically 14 to 17 days
● Shorter contingency periods makes your offer stronger &
shows how serious you are as buyers
● Need a Home Warranty? Seller Rent Back?
Writing a Winning Offer
● Including a short letter to the seller and a picture may help
the seller connect and consider your offer.
● Include a bit about you, your family, your profession.
● Comment on the things you liked about the seller’s home.
● Send your agent a family photo to include.
► Won’t help with a bank owned properties or investor
► Cash offers can close in just a few days as there is no
► Strongest of all financing options
► 5% or more down payment. Few restrictions on condition
of home, buyer has good credit.
► Strong second best financing option
● FHA / VA
► Least down payment (as little as 0%-3.5%), lender may
require repairs, longest closing period. Lower credit ok.
► Also viable financing options
● Making the seller comfortable with your ability to purchase
their property is key to getting your financed offer accepted.
● Present a Solid Pre-Approval
► Get a Loan Commitment – this will set you ahead of
almost all other offers
► Show the maximum amount you qualify for
► List your FICO scores, DTI’s, etc. if possible
● Use a Lender with Local Presence & Expertise
► Easy to contact and part of our team
► Offer to have lender speak directly to Listing Agent (LA)
Use a Redfin Preferred Lender
*In no way does Redfin
benefit financially from
recommending lenders –
we just think they’re great
Inspections: To Waive or Not To?
► Out $300 - $1000 and may not get the house
► Timing can be difficult
► Seller may not allow
► May scare sellers – They usually want a truly As-Is sale
► Deal can quickly fall apart
► What’s reasonable to negotiate further?
● Waived Inspection
► High Risk
► Waiving contingencies is not advisable
● Deposited after offer acceptance, 2nd deposit due with P&S
(5% of purchase price)
● A higher EMD shows you are serious buyers and could make
the sellers consider your offer more
● To be submitted to escrow within 3 business days of
acceptance – include copy with offer
● The check is cashed, held at escrow & applied to your down
payment at closing
● Refunded if you cancel as a result of a contingency
● Could be in jeopardy if you cancel after you’ve removed all
contingencies (seller can’t keep more than 5%)
● A higher deposit makes for a stronger offer
● Go BIG and put down 5% with the offer!
Closing & Possession
● Chat with your lender and see how quick they can close.
Flexibility with closing can make a huge difference
● Take Possession
● At closing or does the seller need a Rent Back?
● The seller may needs to stay longer but want to close
sooner to have access to the funds
● Seller pays buyers PITI while occupying the home after
● Deposit & Rent is held at escrow upon closing
● Usually a max of 30 days – anything more requires lender
How Redfin Helps
● Redfin agents close more deals than an average agent, we
know the market and how to get the job done.
● Help determine market price - CMA, trends and stats
● Understand the listing agent’s negotiation style
► average discount
► market time and
► offer process
● Established relationships with listing agents - we know what
questions to ask, what to say, when to say it
● Write crisp, clean offer quickly (Docusign)
● Team structure allows agent to focus on writing your offer