How to make a winning offer

Question

Hi, we are very interested in small 2-4 units multi-family homes in the CA SF Bay Area. If the seller agent has received multiple offers, how we can write an offer (offer amount, contingencies, terms, ... ) to increase the chance to win but without overpaying unnecessarily? Thank you and any input is much appreciated!

Twana Rasoul · Answer

@James Z. There are different strategies to use depending on the property, location, seller's motivation for selling, etc...work with an agent in your area that has a lot of multifamily transactions and understands multifamily in general to help you navigate the market and be competitive while at the same time having the numbers make sense.  @Derrick L Finn

Brian Garlington · Answer

P.S............Some Realtor's will tell you to remove all contingencies and offer over asking price, etc.   I NEVER tell a client to remove all contingencies. I don't care how "hot" the market is....you always protect yourself with at least an inspection contingency and an appraisal contigency. When buying a 2-4 unit...your offer needs to make snse to you....not the seller. If your Realtor is telling you something different....find a different Realtor to work with.

Eric Johnson · Answer

They want to know you can close. Beef up your offer with some sort of official financing offer or some type of reassurance that if you go under contract on this deal, you have a much higher chance of closing than your offer competition.

Nik L. · Answer

James if you are an investor in the sf Bay Area you will not likely win as most 2-4 are being purchased by owner occupants and they will pay higher and come in contingency free with large cash down for any halfway decent property. My knowledge is specifically east bay. I just sold a duplex in oakland,  listed at $1.495 and sold with three offers at $1.714. I didn’t even look at the one offer that had contingencies. Also important who your agent is and who the lender is. Unless you are all cash and offer higher of course.

Andrew Schutsky · Answer

Some of the tactics that I've read and some that I've used - most of which boost the confidence of the seller that you would close on time:

-Come in with "hard" earnest money from day 1 (this appears to be popular in DFW) and/or increase earnest money deposit

-Reduce time to close as stated above

-Compensate seller for any extensions in closing (in the PSA up front)

-Depending on the seller's current loan situation, offer seller financing (this could be a win-win for both) OR assume the current loan which could help them out huge with yield maintenance

-Some have had success buying nearby properties or offering on nearby properties at the same time which could make a case for a higher bid with larger economies of scale on expenses

-Don't develop a reputation for re-trading :)

Brian Garlington · Answer

What did your Realtor tell you James?

Derrick L Finn · Answer

I am also very interested in this as well. I have been looking at buying a duplex in San Diego area.

James Z. · Answer

Thank you all for your helpful replies!

Amy Ansah · Answer

Interested also let me know how that  turns out i have heard many people talk about buying with no money down how does that work?

David Lao · Answer

I generally agree with the comments of others, and I agree with Eric 100%. You can waive all contingencies, but the brokers who represent buyers generally recommend against it. Waiving all contingencies are probably best for those who have done significant due diligence using the appropriate professionals and with a high risk tolerance to unexpected high cost repairs. I personally don't recommend waiving all contingencies as well, but ultimately, it's the buyers choice.

Without increasing your purchase price and waiving contingencies, the next best thing would probably be to have documented evidence that you have the financial capacity to close, and the ability to close quickly. You'd minimally want to have a pre-approval letter and proof of funds for the down payment and closing costs. You could put a higher down payment, which doesn't affect your total price, but some sellers will see you as financially prepared. You can also show proof that you have more funds than you'd pay for (either through a pre-approval letter or through your personal financial documents), although some buyer agents would advise against showing more than you're willing to pay.  To close quickly, you'll probably want to work with a lender with the experience to close ASAP since the lender is often the bottleneck in a real estate sale.

How to make a winning offer

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