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How To Get Your Offer Accepted In This Hot SF Bay Area Market

Mortgage and Lending with Prosperity Home Mortgage NMLS#386911

As you are aware, the competition to buy a home here in the San Francisco Bay Area is fierce! Multiple offers and sales prices way over the listing price is the rule, not the exception.

So, in a hot market like we have, what are the actions a buyer like you should take to get an offer accepted?

There are several. In this article I will teach you several steps to take. In addition, you will learn a strategy about which homes on the market you should consider making an offer on that you may have overlooked!

Step 1 – Get Preapproved

Preapproved (we call it the Buyer’s Advantage) means getting a conditional approval from a mortgage lender prior to getting into contract to buy a home.

Buyer Advantage Preapproval

I will ask for your income and asset (bank, investment, and retirement account) statements. I will also obtain a credit report. I will determine the maximum purchase price and loan amount you qualify for based on these documents.

When you are ready to write the offer, I will write a letter of preapproval based on your offer price. To make your offer stand out I text the listing agent a link to my website that describes how well you are qualified!

In a hot real estate market, it is absolutely essential to get preapproved! Put yourself in the seller’s shoes. If they receive two offers and one of the offers includes a letter of preapproval and the other does not, the seller would be more attracted to the offer with the preapproval letter because it gives the seller more confidence that the transaction will close.

Step 2 – Lock In Your Rate

Buying a home is stressful! The last thing you want to worry about is paying more every month because interest rates went up while you were searching for a home.

Our Lock Shop n Home program allows you to lock in an interest rate during your home search. Lock Shop N Home

This program solves two problems. First, by locking an interest rate during your home search you are protecting yourself from a higher interest rate and payments than you originally budgeted for.

Second, it guarantees the terms of your preapproval. If interest rates rise, your maximum purchase price and loan amount decreases because of the additional expense.

Step 3 – Make Your Best Offer

You’ve found a home that meets your needs. Now is the time to write your offer.

I defer to your real estate agent for the strategy and specifics. However, you do want to know the comparable sales in the area and how many offers the listing agent is expecting.

If you make your best offer in a hot market, there is a possibility that the property appraisal (an appraisal is a report stating the market value of the property) states that the market value is less than your offer price.

The lender uses the lower amount of the appraisal value and offer price in determining the loan to value percentage (loan amount divided by property value).

The loan to value percentage determines eligibility for the loan, interest rate, and whether private mortgage insurance (PMI) is required.

Let’s look at an example. You have offered $1 million with a 20% down payment of $200,000 and loan amount of $800,000.

The appraisal comes in at $950,000. 80% of $950,000 is $760,000. Your alternatives are to come up with $40,000 more to keep the loan amount at 80% loan to value percentage, or to keep the loan amount at $800,000 and pay for PMI.

Paying for PMI is not as bad as you might think using my Appraisal Gap Strategy. It’s important to consider this possibility prior to making your offer. Knowing your numbers considering a low appraisal will give you the confidence to make your strongest offer!

Step 5 – Sweeten Your Offer

When the market is hot, buyers have been known to “sweeten” their offer. Letters to the seller describing why they love the property, letting the seller stay in the property for a time period after the sale, and the use of vacation homes the buyers own are some of the sweeteners that I have seen offered by buyers.

These are nice sweeteners. However, wouldn’t it be better to guarantee in writing that you will close on time with a substantial payment to the seller if you do not?

When you are preapproved, we offer a $10,000 closing guarantee! If we do not close on time and it is our fault, we will pay the seller $10,000!

Before you present your offer, we give you and/or your agent a certificate with the seller’s name on it. This certificate helps your offer stand out from the competition!

Have You Looked At This Segment Of The Market?

Now that you have been preapproved, locked in an interest rate, and have a closing guarantee, it’s time to look at properties.

Buyers are always eager to see the new listings that are coming on the market, and they should check them out. However, there could be a better opportunity to get your offer accepted on a segment of the market that is sometimes overlooked – stale listings.

A stale listing is a home that has been on the market longer than the average time in the local market. Buyers often become skeptical about these homes because of the perception that something is wrong with it.

The perception regarding a stale listing may be true or not.

Here in the Bay Area, the eventual sale price on a listing is typically higher than the listing price. If you are making an offer on a new listing at your maximum preapproved price you have no room to negotiate, especially if you know there are multiple offers. Stale listings, on the other hand, give you a better chance to negotiate.

Let’s look at an example. You have been preapproved to purchase a home for $1,500,000 with a 20% down payment.

Since the market is hot, you are looking at new listings priced between 1.2 million and 1.4 million, assuming the sale price is going to be higher.

That price range makes sense for the new listings. However, there is going to be a lot of competition.

Here is the stale listing strategy: look at homes that are stale above the price range you are preapproved for and in your offer ask for a credit from the seller to pay your discount points.

What I can figure out for you is the price you can go up to with the corresponding amount of the credit you should ask for from the seller to approximately equate the same amount of monthly housing expense you have with your preapproval.

In this video I walk you through the numbers so you can understand how this works.

The stale listing may not have been attractive to people looking in a higher price range. However, it may be attractive to you because it is in a higher price range than you thought possible!

Let’s summarize how you get your offer accepted in this hot Bay Area real estate market: Get preapproved so you can compete with other offers, lock in your rate to prevent higher expenses and to protect your preapproval amount, make your best offer by working with me to figure out how far you can stretch and with what terms, sweeten your offer that makes your offer stand out, and consider stale listings in your home search so you can negotiate the best terms for you!


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Would you like to talk to Phil - call or text (650) 222-0386 
Phil Caulfield NMLS #386911 has been helping people obtain mortgages since 1985. The views, articles, postings, and information listed at this website are personal and do not necessarily represent the opinion or the position of  Prosperity Home Mortgage LLC.




Michael Jacobs
Pasadena, CA
Pasadena And Southern California 818.516.4393

Hello Phil - sometimes looking at alternatives can open your eyes to other possibilities.  In real estate and in all other aspects of life.  Be prepared to be amazed.  

Mar 21, 2022 05:02 AM