How Low Can You Go?!

With summer camp memories abound as the season of chillaxin’ continues… you might think ‘how low can you go’ is all about the old-fashioned game of limbo! But alas we are still living and breathing the world of Silicon Valley real estate in full force – and we are talking about what every buyer wants to know: how ‘low’ of an offer can I make and still win? Is an offer of $200K over-asking enough?!

I know… it’s likely most of us never thought we’d get outbid by a cash buyer by several hundred thousand dollars, but stranger things are happening in Silicon Valley real estate every day. While we have addressed this question a bit in our previous blog ‘BUYER QUESTION 1: DOES ‘WINNING’ MEAN OVERPAYING?!’ , we wanted to add a bit more food for thought as the sellers’ market continues, and rate trends make buyers wary of going too far out of their comfort zone.

Here are a few buyer considerations for making an offer that’s strong & steady:

#1: Take Comps Into Account: With A Grain Of Salt. It’s true that comps are typically your best source of data for what a home in the desired neighborhood is ‘worth’ today – but in a fast-moving market, a comp a few months old may be too old to rely on. An experienced and truly local agent can reveal trends and price considerations that the MLS can’t keep up with.

#2: Days On Market – It’s Still A Thing. Believe it or not – not every home sets a record sale in a record amount of time. There are homes that take longer than a week or two to sell – for various reasons. If you see a home has been on the market more than 14 days, your agent should do some digging as to why – and what that means for your negotiating power. Is a rent back more important to the seller than the highest offer? Are inspections revealing something that is scaring buyers? Did the home get listed on a holiday weekend and lose viewing time?

#3: Know What Makes This Home Unique. Is this the only 5-bedroom floor plan in the zip code? Rare corner lot? The tri-level that you see on every corner? If this home has a feature you must have and rarely see – making your highest and best offer might be the safest route. If it’s a common floor plan with common features and you’ve seen 7 of them, chances are you may see it again. The message here is know how bad you want it and why.

BONUS TIP: Scoping out the competition can be a wild card – but it can pay off. If your agent knows the listing agent well, he or she may be able to gather some insights into who else is looking to make an offer and what they are bringing to the table. Granted it only takes one offer to outbid you – but knowing if you are going up against all cash, an investor or  buyer whose budget is tight may help you position yourself accordingly. Your agent should get the dirt before you bust out the shovel!

Call us anytime, with any questions: 408-596-5526.

All our best,

Mark & Jason