When my daughter joined me at District Homes I was put in a position to train her in the art, science and practicalities of real estate. Our craft is not unique in the diversity of the skillset. Many professions have hundreds of seemingly disparate components embedded within them. That said, I believe what we do - specifically in our highly competitive inner east bay market - is particularly varied in the skills and knowledge base one must master. Many elements of our job can be quantified; contracts, structural issues, rules around lending, strategy and design - to name a few. But other elements, very important, perhaps even the most important ones, cannot.
Last week I closed escrows on a number of highly competitive homes, representing buyers. How did I help my clients win with 18, 12, 7 offers worth of competition? I could try to break down how I know what to advise my clients to offer - of course there are inputs to the equation - but fundamentally you either have the knack for predicting or you don’t. There is an element of talent when it comes to price prediction and it seems the apple hasn’t fallen far from the tree.
My daughter has the knack - I watched her do it last week - helping guide her buyers in a highly competitive multi-offer scenario in Berkeley. She was up against seasoned agents on all sides of the transaction and ultimately she helped her clients prevail. I actually got the chills as I sat next to her during the multiple offer scenario and observed her work from her “gut” on how to proceed. I could feel she was in the groove of accurate prediction.
You might wonder if we simply advise that our clients shoot the moon with their initial offer? To better illuminate how these situations often work, let me describe:
No buyer is interested in offering a million dollars over the initial list price - so I never, ever advise this approach from the start even though ultimately this may be how we end up winning. Instead, I begin by transmitting the knowledge I already have to my clients in small, digestible chunks. Because I am such an active agent I usually know the majority of the local pending sale prices before they are closed. Pendings are the most important data point for me and therefore for my clients. So right from the start I share the pendings including the number of offers and anything else I can glean from my colleagues. From there we look at the number of offers and the spread of offers. Was the winning offer an outlier or was there a cluster and multiple counters? Meanwhile, I am also keeping a pulse on the energy of all the communities I serve - how is El Cerrito relative to Berkeley? What I am interpreting is the mood of the market, the trajectory of the sentiment of the buyer pool. On offer day I am also interested in who is writing offers besides me. Some agents have reputations for being “heavy hitters” so if I know they are in the mix I need to take that into account. For this same reason I keep my plan to submit an offer close to the chest. Of course, I want the listing agent to know I have done my due diligence representing my clients but I also don’t want her sharing with other agents that I am committed. It is in this way that I am able to amalgamate a sense of where a given property will land and I will share this information with my clients. Sometimes, most of the time, it is a leap too far for a first offer. That is 100% ok with me! I want my clients to listen to their own instincts, not mine. The last thing I want is for my clients to feel bullied or pushed into making what might seem like an insanely high offer and win without having pained with a loss or two first. Now, sometimes just engaging in and watching the market for a couple of months is enough and my clients do win on their very first offer but most of the time I encourage buyers to make what I tell them is 99.9% likely to be a “losing” offer. In this way it becomes their experience guiding them, not just mine. This is critical for success.
I cannot possibly expect my buying clients to understand this market without having educated them in advance - that is my job. Taking the time to do this is the work. Getting offers accepted without buyers feeling bullied, pressured or rushed, that is the reward.
