San Francisco Real Estate Pre-Emptive Offers
Too Many Real Estate Buyers
Buying real estate when there are too few listings can be a challenge! When the market has many buyers chasing too few real estate listings it gets crazy. First, listing agents want to set a specific time for presentation of all offers, so as to create a competitive atmosphere. Second, assertive buyers’ agents attempt to present an offer ahead of the specified time, to try to get their buyers offer accepted. This type of real estate negotiating is called “a pre-emptive offer”.
If a buyer really wants a property and we have several days before the offer date, I ask “Do you want me to try to present ahead of the scheduled offering date?” Most real estate buyers say yes. I explain this may be a far reaching goal, but we have nothing to lose, except for the Seller saying No. It reminds me of a situation which recently happened.
Actual San Francisco Real Estate Story
My real estate buyers were both pharmacists who have bought from me before. Terrence and Linda (their names have been changed to protect their privacy) have two children and close family ties so they decide to buy an apartment building for their parents and as a future investment. They find a dated, but very clean and spacious duplex with a great view in Potrero Hill—one of the warmer neighborhoods in San Francisco, which would be desirable for people unaccustomed to San Francisco’s blistery weather. Plus, there was a lower unit below which was vacant and has no stairs—perfect for older people. And, the two units were not under rent control so rents could be raised. An ideal situation, except for the fact that this is going to be a competitive battle and Terrence and Linda had no idea how sought after a duplex without rent control can be.
After the first showing, they were in love. Terrence had some background in construction and was comfortable with no inspections. They had already done their homework and were pre-approved. Now it was just the price. I asked the agent, Ken H., when offers will be presented. “We haven’t decided yet,” he said
That was just the opening I needed to bring the ‘Pre-emptive Offer Strategy’ to my clients. “But,” I said, “for Sellers to agree to not create a competitive environment for offers, we would need to give them everything they want plus a bit more. So the offer would have to be super strong – no conditions and a significantly higher price, creating a situation which would make it hard for a Seller to refuse.” I suggested offering $100,000 over the asking price.
Ask For What You Want
Once the offer was written with the 3% deposit check, pre-approval letter and Buyer’s introductory flattering letter to the Seller, I called Ken H. and told him I had an offer above asking.
He screamed into the phone, “I am not presenting any pre-emptive offers to my client!”
I was taken aback. Partially because it would have been nice to be thanked for having a well-qualified offer, but mostly because the National Association of Realtors Code of Ethics requires that all offers be presented to Sellers and it is the Seller only who makes the determination if they will accept an offer now instead of waiting.
But I am not intimidated. “You cannot make that decision for your real estate client,” I say.
“I told you I am not presenting any pre-emptive offers! We will begin receiving offers next Thursday at noon.”
“Again, Ken, you cannot make that decision. I think this is probably a situation for our managers to discuss.”
He agreed, and back at the office a few hours later I received an email, stating that Ken did discuss the pre-emptive possibility with his real estate client and she had instructed Ken to wait until next Thursday to review offers.
I smiled. Well, we tried. Meanwhile Terrence, Linda and I can take a look at what else is out there in the San Francisco real estate marketplace. Check in next week to find out what happens with these motivated real estate buyers.
Be aware that any clients names have been changed to protect their privacy. Furthermore, Paula Pagano does not accept any liability for the content of any Blogs and this Website or for any actions you take or resultant consequences of actions taken based on the information provided in this communication. Any advice is my opinion after being a 35 year experienced real estate agent in San Francisco.