It’s common knowledge that California has many of the nation’s most attractive, and therefore most competitive, real estate markets. It should be no surprise why: from idyllic beaches to innovative tech hubs, the Golden State has everything you could dream of. One thing in short supply, however, is housing inventory. In fact, according to the California Association of Realtors, March indicated a 10% drop in supply year over year in the San Francisco Bay Area. Southern California had a 14% decline during the same period. When you finally find the perfect home in your favorite neighborhood, it’s important to craft the best offer possible to give yourself the highest odds of having it accepted. Check out these three tips to create a strong, and hopefully successful, offer on your California dream home.
Perhaps the most important step to creating a competitive offer is getting a pre-approval letter from your lender. This is different from getting pre-qualified because instead of simply giving your financial information verbally, you actually provide financial documents to be reviewed including recent bank statements and tax returns from the last two years. You’ll also have a credit check performed. When you submit a pre-approval letter from your lender along with your offer, the seller knows that you’ve got your financing in order and are likely to close on time.
If it is possible for you to place a higher percentage down payment, you may also consider showing this larger down payment in your pre-approval letter. When you’re buying a home in such a competitive market, fronting some extra cash can also improve your chances of having your offer accepted. A good way to do this is to offer a larger deposit. This is attractive to sellers because, just like the pre-approval letter, it shows that your loan is likely to be approved.
Write a Personal Letter
Sellers are people too, and leaving their current home can be an emotional process. Maybe it’s the place where they raised their children or first started their California dream job. Tell your story of why you love their home and what makes it special to you. Are you a fan of the architect who designed it? Is it in close proximity to your favorite local haunts? Don’t be afraid to tell a story, because it’s very possible that it could emotionally resonate with the seller, leading them to accept your offer over others. Your real estate agent can submit your personal letter along with your official offer, so that it gets delivered directly to the seller.
Give Your Best Offer First
Unless the home you’re considering is way overpriced for its condition and neighborhood, you should almost always go in with your strongest offer straight from the beginning. This is especially true if the listing has only been up for a few days. Chances are, yours won’t be the only offer on the table. You obviously don’t want to commit to more than you can afford (or more than you think the home is worth), so crunch the numbers before you make an offer and make it your most competitive. Hopefully it’s the best offer the seller receives, but if not, you have the peace of mind knowing that you wouldn’t have spent a penny more to make it happen.
If you’re actively house hunting in the Bay Area, Los Angeles, or anywhere else in California, then start thinking about how to strengthen your offer. We can help you get a preapproval letter — just contact us today.