It’s not exactly a beauty pageant, but potential buyers in this summer’s hot real estate market on the North Shore need to dress up their offers. This week, The North Shore Weekend asked area realtors and brokers what advice they are providing buyers when many properties for sale are receiving multiple offers and prices are ticking up.
Their message? Make a personal connection.
Elise Rinaldi, a broker with @properties in Winnetka, says when sellers have multiple offers in a similar price ranges, sometimes it’s a shared interest between buyer and seller that makes the difference.
“A client of mine wrote a letter to the homeowners telling the story of their journey that included their status as a veteran. That seller chose my client’s offer as a way for them to honor their own father’s service to our country,” Rinaldi says. “I don’t think there is a definitive formula for winning in this environment.”
Rinaldi says a good buyer’s broker will ask the right questions to understand a seller’s motivation and then craft an offer that best meets the seller’s needs.
“I had a client win in a multiple-offer situation by offering a longer than typical closing which allowed sellers’ children to finish out the school year and move over the summer,” she says.
Not every buyer can pay over asking price and/or go without a finance contingency, and those deals are sometimes the most difficult, Rinaldi says.
“We are seeing a lot of cancelled contracts because buyers are overpaying; they want perfection,” she says. “Deals that are win-win and make everyone feel good are the ones more likely to get to the finish line.”
Knowing the priorities of the seller is important for buyers and their brokers to shape an attractive offer. Sometimes convenience and flexibility is worth more than money.
“When I think a house might go into multiple offers, I’ll try to find out what is most important to the seller. I’ve also asked listing agents what it will take for the sellers to cancel all other showings,” says Laurie Field, an agent with Engel & Völkers in Highland Park. “If that’s not an option, I suggest the buyers submit their offer quickly, at above asking price with an escalation clause.”
Field says an escalation clause (when the buyer offers to pay X dollars above the next highest verifiable offer up to a certain dollar amount) used to be her secret weapon, but recently there have been so many offers with escalation clauses she makes sure the sellers know her buyers are willing to be flexible on other aspects than just purchase price.
The great myth about a hot real estate is that the biggest check gets the prize, when in fact there are multiple and complex factors involved in a property sale.
Gloria Matlin, an agent with Compass North Shore Real Estate in Winnetka, says many sellers have emotional connections to their homes and want them left in good hands.
“It’s not always about price—we stress cash offers with no appraisal contingency and as-is,” Matlin says. “Though we are not encouraging letters to owners, some buyers are still insisting, and it does help a seller feel better about leaving their long-term homes.”
Matlin says the tight market is leading to some serendipitous moments. She cites one buyer client coming from out of the North Shore area who walked in the door of a home and experienced love at first sight. Unfortunately, there was already an offer on the table but then the buyer agreed to purchase an adjacent lot and sealed the deal.
“In another situation, we had multiple offers and our buyer jumped through hoops to get it, even after the first appraisal came in low,” she says. “We just closed and now they are getting married in the backyard!”
Louise Eichelberger, a broker with @properties in Winnetka, has a few decades under her belt in the North Shore real estate market. She says the frantic
“Behavior in this strong market has been a surprise to some real estate brokers who have been in the business for only 10 to 12 years, but not to those of us who have been through numerous up-and-down markets,” Eichelberger says. “I believe that civility rules; talk to the other agent, find out preferences of the other party, have your buyer clients send a realistic and pleasing—but not obsequious—letter of introduction, and have the buyers’ financing totally teed up.”
Eichelberger says that like the late ’80s, late ’90s, and the boom experienced in the early part of this century, it’s a sellers’ market for desirable homes that are priced right. Sellers may worry about underpricing their home in a strong market, but with proper exposure and expert management of market interest, multiple buyers will recognize the value of the property and will swing high and hard on price.
“I listed a beautiful newer construction home in Kenilworth on a large lot, then placed it in the Private Listing Network, and it immediately attracted strong interest with back-to-back showings and multiple offers,” she says. “These circumstances may seem like the dream scenario, but there is stress on the sellers to choose the best offer and on the listing broker who is committed to treating each set of buyers fairly.”
Jamie Roth, a broker with Engel & Völkers in Highland Park, says there are many enticements a buyer can give to a seller beyond just asking price. Many of those enticements are well known, such as waiving an appraisal contingency or the inspection, and some are less well known.
“That’s why it’s important to have an experienced agent helping you in this market,” Roth says, “On the last multiple-bid offer, we let the sellers know our reasons for wanting their home and location over any other in the area, and that we were committed to making it an easy and seamless transaction.”
Joey Gault, a broker with @properties in Highland Park, says listing agents also like to see buyers who are using established lenders.
“If obtaining a mortgage, using a reputable lender that the listing agent is familiar with is critical,” Gault says. “If you can’t offer cash and have the ability to cover the spread between the contract price and appraisal, waive the appraisal contingency to have a better shot.”
One disconcerting aspect of a tight market for buyers is that they might not have the time they want or need to make the right decision. Houses are gone before they get can get a second showing.
“Speed is key. I told my buyer the second a house came on we had to see it and write an offer immediately,” says Carly Jones, with Engel & Völkers Chicago North Shore. “Within six hours of the house being listed, we were under contract.”
Jones says networking is another huge key to success. When agents have buyers, who need certain types of properties, agents have to be using every avenue to find out about listings coming on the market and be persistent and get clients in the door quickly.
“You can’t always be the highest offer, but if the remaining terms are clean, you make your chances better,” she says. “The reality is most buyers cannot offer cash and buyers should not waive an inspection. I always warn my sellers to not get caught up only on price because if it is too far over, it may not appraise. In this market. You may lose a couple properties until it works, but typically it all works out.”
A continuing issue that’s keeping inventory low— and frustrating potential buyers, is sellers that who may be inclined to list their homes have nowhere to go. The market is just as tight for them.
“This is a market like we have not seen before. We’ve had sellers’ markets before, but in those markets, the sellers had somewhere to go. We were in a normal housing cycle of moving up and then moving down,” says Karen Arenson, broker with Engel & Völkers Chicago North Shore. “We do not have that right now. So many owners of homes who would normally be downsizing or rightsizing are staying put.”
Arenson says that while low-interest rates help push buyers into the market, many potential sellers have pretty good rates on their mortgages as well, and those who may have thought about retiring to a communal-living situation are staying put because they have more space at home. Whatever buyers can do to tip that scale will make a difference.
“As a buyer, whatever you can do to mitigate that fear for the seller will tilt the favor in your direction. This could be offering an early closing and a rent back for very little money or offering a completely flexible closing date within a certain time,” Arenson says. “Obviously, to be able to offer these carrots to the seller a buyer needs to have flexibility.”
Laurie Lawler, a broker in the Winnetka office of @properties, says it’s incumbent upon real estate professionals in a fast market to be up front and honest with buyers about their chances for land ing their dream home.
“We need to set buyers’ clear expectations on the market and how swiftly sales happen. Buyers need to be flexible with closing dates, inspection items, and be able to respond immediately,” Lawler says. “Equally important is your broker’s experience and ability to negotiate with the seller’s agent, to keep the lines of communication open, and to act swiftly.”
Lawler says she has had success on the Private Listing Network for homes that were not yet on the market and made immediate cash offers at full price.
“Time was of the essence in all these transactions,” she says.
“When representing a buyer in this climate, all of the terms are taken into consideration, not just the price,” says Susan Brown Burklin, with @properties in Highland Park. “We are seeing a large percentage of buyers offering to buy as/is, meaning they will not ask for a credit for any inspection issues.”
Burklin says an appraisal addendum is not uncommon these days and buyers are offering to pay the difference if the home does not appraise.
“As the seller’s agent, it is our responsibility to present all of the offers and terms to our client and go over the advantages and disadvantages of each one,” she says. “A spreadsheet is commonplace, and I have a template that is getting a lot of use!”
Cash can be a secret weapon used even if the buyer ends up securing a mortgage, but it’s not a guaranteed win, according to Ted Pickus, a broker with @properties in Highland Park.
“I have been in multiple offer situations and have found offering cash with the option to get a mortgage can set my clients apart,” Pickus says. “The risk for this is that there is no mortgage contingency or appraisal needed, so my clients have to feel confident they can get a mortgage and that the house will appraise out.”
Pickus says his best advice to selling clients is to accept the offer that has the highest potential of getting to the closing table, “It’s not always about the highest offer; it’s who will get to the closing table with the fewest obstacles,” he says. “It’s looking at the whole picture of the buyer and figuring out who’s going to close with the highest price with the least resistance.”
Susan Maman’s advice it to keep it simple if you can.
Maman, a broker with @properties in Winnetka, says, “The best things that a buyer can do to win a listing is put their best foot forward, have the cleanest terms, buy for cash on an “as-is-basis,” ask what the seller’s preferred closing date is, and do an escalation clause if needed.”
For Colleen McGinnis, the trick to finding a happy buyer and happy seller is all about connection.
“It’s one-on-one. To edge out the other bids you must have a personal connection,” says McGinnis, a broker with @properties in Winnetka. “And make sure you have a good relationship with the other realtor.”
On top of all of those things, Eichelberger says knowledge is power.
“An effective broker must react to the market’s reaction, share that information, and help their client benefit,” she says, “That way, everyone is on the same page.”