Negotiating in the wacky world of Bay Area real estate
Question: After months of home shopping, we found the perfect property. We were thrilled. The buyer’s agent we hired went to work drafting our purchase-offer proposal.
Then things took a turn for the worse. My father-in-law got involved. He lives out of state, but the property is in the San Francisco Bay Area.
He requested and received a draft of our purchase offer. Since he contributed $20,000 to buy our home, I remained quiet. My father-in-law’s advice was counterproductive — worse, it was counterintuitive.
My father-in-law has owned many homes. All of which were bought out of state. When he bought his properties, he used a 1 percent earnest money deposit (EMD). However, the San Francisco Bay Area custom is a 3 percent EMD.
My father-in-law insists on two weeks of inspection, loan and appraisal contingency periods. In the San Francisco Bay Area, contingency periods are measured in days or waived.
Regarding price, my father-in-law made it known that he never pays over the list price. At that point, our buyer’s agent got involved.
My father-in-law and our buyer’s agent spoke by phone. The results were devastating. We lowered our offer to $5,000 over the listing price, lengthened all contingencies to two weeks and lowered the customary 3 percent EMD to 1 percent.
Yesterday, we submitted our purchase offer by noon. Hours later, after receiving 12 offers, the seller’s agent called our buyer’s agent. The seller’s agent’s opening remarks were, “Let’s be real.” And “You are not even in the ballpark.” According to our buyer’s agent, he asked the seller’s agent if our offer was “In the middle or bottom of the pack.” The seller’s agent replied, “The bottom.”
What do other first-time homebuyers do in this situation?
Answer: It is safe to say your father-in-law ignored everything your buyer’s agent had to say. That is a problem.
The counterintuitive is right: Your father-in-law constructs an offer that one would see in a buyer’s market or a rural area. Full stop. The San Francisco Bay Area has been in a seller’s market for years.
You can return the $20,000, aka gift money. You could buy a home without his input. Or focus on properties that will only attract one offer.
Removing obstacles is the key to a successful home sale. You must change the narrative. Your father-in-law is the antagonist. The sooner he is written out of the story, the faster you and your spouse can narrate a homebuying script without a subplot.
For Housing Market Data in your area, visit my webpage for trends here. Do you have questions about home buying or selling? Full-service Realtor Pat Kapowich is a Certified Trust and Probate Specialist, Certified Real Estate Brokerage Manager and career-long consumer protection advocate.
He is based in his hometown of Sunnyvale, California.
Office: 408-245-7700; Broker# 00979413 Pat@SiliconValleyBroker.com