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1. How To Win In Multiple Offer Situations 2. Agenda A little about Redfin Why All the Multiple Offers? Preparing to Buy Starting an Offer Writing a Winning Offer Price Financing Contingencies Earnest Money Personal Touch How Redfin Helps 3. Working with Redfin 4. 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 No obligation Commission credit 5. The Redfin Refund You buy and pay for your dream home. The 6% sales commission is split. The Listing Agent gets 3% commission. Your Buyers Agent gets 3% commission. You save with Redfin. Redfin keeps a portion as our fee. 6. Partners in the Process AGENT Responsible for your success Writes your offer Handles negotiations ASSOCIATE AGENT Takes you to see homes Sees 50+ homes a week TOUR COORDINATOR Schedules tours Prepares paperwork TRANSACTION COORDINATOR Prepares paperwork Works with escrow 7. 5 Tips for Winning a Bidding War 1. Make the competition eat your dust sign up a redfin listing alert! 2. Get pre-approved with a local lender & get underwriter approval 3. Start the conversation early 4. Write a letter & appeal to the seller 5. Know your limits 8. Never Miss a Home 9. Get Ready! Obtain a Pre-Approval Letter Your Lender is the most important part of our Team! Ask your loan officer how they can help you in a competitive situation (shorter contingency period, quick closing?) 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 No pre-qualification letters! 10. Get Ready! Lets Do our Homework Buyers agent should find out what the sellers situation is & why they are selling What are the sellers motivations? What are the sellers wish lists? 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 11. Get Ready! 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 $5,000 more equals $?/month Know When To Walk Away You cant control what someone else is willing to pay 12. Get Ready! Documentation Having your finances and other required documents in order prior to making an offer can accelerate the process. Heres what well 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) 13. 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 negotiating Know the Sellers Current Situation 14. 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 Most Sellers DONT counter offer! Blind betting you dont know what the other offers are What is the maximum price you are willing to pay? 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 start 15. Earnest Money Deposited after offer acceptance at beginning of escrow A higher EMD shows you are serious buyers To be submitted to escrow within 3 business days after acceptance most buyers offer to submit within 1 business day! 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 youve removed all contingencies Go BIG and put down 5% with the offer! 16. 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 is reached. Inspection Contingency Typically 0 to 7 days Financing Contingency Typically 10 to 14 days Appraisal Contingency Typically 10 to 14 days Shorter contingency periods makes your offer stronger & shows how serious you are as buyers About 90-95% of offers are non-contingent! 17. Contingencies: To Waive or Not? Waived Inspection Contingency Buyers now learn as much about the property prior to submitting an offer Review all disclosures & seller provided reports Complete inspections or walkthrough with contractor before submitting an offer Waived Loan/Financing Contingency Buyers now obtain commitment letters/fully underwritten approvals Speak with lenders ahead of time regarding your financial situation and qualifications Waived Appraisal Contingency Appraisal still happens even if this contingency is waived If appraisal comes in low buyer is obligated to purchase the home at the higher offer price - while the lender will only finance up to 80-90% of the lower appraised value Buyers will need to bring in extra cash to cover the difference 18. Contingencies: To Waive or Not? Non-contingent offers have become the norm in this market Buyer waives all contingencies & cannot back out of the transaction without the risk of losing their earnest money deposit It shows the buyer has done their homework BEFORE submitting their offer It gives seller the comfort & peace of mind, knowing the buyer is serious and committed to closing the transaction Waiving contingencies is not advisable but serious buyers consider this strategy in order to be competitive in todays market! 19. Financing Cash Cash offers can close in just a few days as there is no loan approval process. Strongest of all financing options Conventional 20% 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. Last choice of seller, some wont even consider this option 20. Financing (continued) 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 is a fully underwritten approval and will set you ahead of almost all other offers Show the maximum amount you qualify for List your FICO scores, DTIs, etc. if possible Use a Lender with Local Presence & Expertise Easy to contact and part of our team Have lender speak directly to Listing Agent (LA) and/or seller 21. Writing a Winning Offer Use a Redfin Preferred Lender *In no way does Redfin benefit financially from recommending lenders we just think theyre great lenders! 22. Commitment Letter Fully Underwritten Approval 23. Closing & Possession Closing Flexibility with closing can make a huge difference Find out how quick your lender can close 20 to 25 days is standard in this market Possession - At closing or does the seller need a Rent Back? The seller may need to stay in the property after closing - but will still want to close sooner to have access to the funds Most buyers will offer the seller rent back for FREE but you can also choose to charge them a daily rate (based on your PITI) Deposit & Rent is held at escrow upon closing Usually a max of 30-60 days anything more requires lender approval 24. Personal Touch 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 sellers home. Send your agent a family photo to include. Wont help with a bank owned properties or investor sellers 25. Love Letter to Seller 26. Offer Cover Page 27. How Redfin Helps Redfin agents close more deals than an average agent, we know the market and how to get the job done. We are advocates for our clients Help determine market price - CMA, trends and stats Understand the listing agents 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 28. Thanks for Coming! Questions? Get in touch: Saleem Buqeileh saleem.buqeileh@redfin.com Regina Puzon regina.puzon@redfin.com Check out our upcoming classes: http://www.redfin.com/events