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Ep. 46 : Bidding Wars! How To Win Them

Ep. 46 : Bidding Wars! How To Win Them

In this episode, David Sidoni answers these real first time home buyer questions brought to him, since this market defies logic, and real people are real confused, and using his sixteen years of first-time buyer expertise, he answers questions and drops tools, tips, to not just survive in this market as a buyer, but thrive and get this done.

What is it like to be a buyer in 2022? One word – insane. So how do you handle bidding wars and the home inspection when you’re being asked to make such a monumental decision in a whirlwind process? And is this all so physco that your best move is to just sit it out and wait until we get back to normal?

David is the leading authority for educating and empowering first-time homebuyers with detailed, useable information on how to start, plan, and navigate the home buying process. His podcast is insanely detailed and breaks down buying a home from A-Z.

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Ep. 46 – Bidding Wars! How To Win Them

HBH 46 | Bidding Wars

2021 is MADNESS if you are trying to buy a home. Bidding wars are the norm, but they are anything but normal. As a first-time homebuyer, you may be confused enough already without this mess of a process happening. So in this episode, David Sidoni, the How to Buy a Home guy, gives you his insider tips on what’s working in bidding wars, and what’s killing your chances. 

Bidding Wars! How To Win Them

First-Time Homebuyers Are Getting Crushed In Bidding Wars.

Are you trying to buy a house? You and everybody else in the worldLet’s talk about how ridiculous it is trying to buy a house in 2021 and the craziness of the bidding wars. 

 

I’m doing this at the end of February 2021. If you are reading this in the future, it is unbelievable out there. The bidding wars are real. This is our show that tries to take some of the mystery and the confusion out of what is already an overwhelming process, even in a normal market. If you’re trying to buy a home in 2021, you know it’s anything but normal. I have taken out and put in offers for five different buyers. Some of them, I put in 2 or 3 different offers over that time because we didn’t get the house because there were a million other people trying to buy every single condo, townhome and house. We’re talking 10, 20, 30 offers. 

I even had one home that when it all is said and done, in over just three days, there were 90 offers on the home. That isn’t normal. You’ve got me, the completely abnormal host of the show. I’m David Sidoni, the How to Buy a Home Guy. I figured I’d do an introduction because I’m assuming, we might have some new readers out there. Maybe you’re one of the 89 people that didn’t get that home with the 90 offers on it. Maybe you didn’t get it, so you’re looking for the magic bullet, either to finally help you get an offer accepted or to blow your brains out in frustration. I get it. I feel you. 

Remember, the bad thing about 90 offers on a home is that 89 people are still going to try and buy another house. Click To Tweet

Let me know that my abnormality may be helpful to you as you’re trying to figure out the bonkers battles that are happening out there for first-time home buyers. My unusualness stems from a lot of things, but one of the ways that I’m unusual is that I’m an experienced realtor solely focused on you, the first-time homebuyer. Most of the realtors that cater to you, new guys, end up being new too. They are rookies. The people that just got their license or they’re the part-timers, that’s because those people seem to have all the time in the world to talk with you, but it’s mostly because they don’t have any other clients. Oftenthey don’t have quite a clue on how to help you at a regular standard market level, let alone this battle royale we got going on right now. 

Why do those types of realtors look for you while many of the experienced professionals would rather pass you off? The name of the game in real estate is that you start with first-time home buyers when you’re a newbie, and then you shift as you grow and progress and get experienced into working with mostly sellers because that’s where the big money is. You might sprinkle in a first-time buyer once in a while. This worked for a long time because pre-internet, buyers used to come to your listings, seeing that sign in the yard and they’d see a home for sale. You, as the realtor, could work with both. Nowadays, buyers realize they should educate themselves on the process and you have the means to do so. This little thing is called the internet, there are reviews out there and my favorite, podcast. 

I started to show for all your curious minds to hear the inside secrets. I’m taking several years of experience, that’s as of 2021, to help all you first-time buyers turn your largest monthly bill, your rent, into your largest automatic wealthbuilder, all with the guidance of an active, experienced professional, who thinks that you first-time buyers would be getting screwed by the real estate industry. They’re using you as guinea pigs to train the newer agents. They’re not giving you the respect and the high level of service that you deserve. If that sounds good to you and you’re a new person reading, subscribe. You’ll automatically get information. The poor service that first-time buyers are getting has never been more evident than in these bidding wars of 2021. There are few homes for sale and rents have been increasing steadily for quite some time. A lot of first-time buyers are getting sick of it. 

What To Do In The Bidding War

They’re seeing the rising rents and they also see that the mortgage to buy a new home, your first home, it’s the cheapest it’s ever been in history. That means lots and lots of buyers, but there aren’t a lot of homes for sale. That low inventory means that we’ve got your basic supply and demand situation with the scales tilted way in one direction. I was talking about the why. Why we’re in this mess right now and why the bidding warare happening? Let’s get into the what. David, thanks for the inside secrets about why this happened, but what the hell do I do? I know everyone wants to know. 

HBH 46 | Bidding Wars
Bidding Wars: “Money’s money.” That means you have to show that your 3.5% down payment is a real, legitimate loan.

First, don’t give up. The question I get all the time is, David, it’s so hard right now. I don’t want to battle in a bidding war with all the buyers driving the prices up. Isn’t it better for me to wait for the prices to come down and get a home when there’s less competition?” That’s a loaded question. It takes a lot of time to go over it. I want to make sure that I speak to those first-time readers and you wanted to find all the tools and techniques to win the bidding war, which means that you aren’t asking that question. You want to go for the battle. 

If you do have that question and you think you should wait until prices go down, go back, read Episode 38. That’s the 2021 housing market forecast, and specifically, Episode 40that one’s called Should I BuMy First Home Now, OWait? Go backread that and you’ll get the answerMaybe it’s not the same answer for everybody, but there is a general answer if you’re in a decent position to buy a house, that it’s better to fight the battle than to waitbecause mathematically, it doesn’t make sense. Remember, the bad thing about 90 offers on a home is that 89 people are still going to try and buy another house.  

The good thing is if you get yourself a warrior realtor to help you, and you win one of those bidding wars with all those extra buyers, when you own that home, there are still going to be 89 people out there trying to buy another house because you beat them in one of those battles. I bet they all offer a little bit more the next time, which means the house that you secure by fighting this battle and making that choice, it’s going to be going up in value in a matter of weeks. It will be significantly more as you get to the end of the year. 

The tips I’m going to give you are not everything you can do to win the bidding battle, but these are some high-level, extra tips, the over-the-top stuff that you want to do. Remember, your specific area is going to have all kinds of different things that don’t happen in California. Even in California, there are different things. Wherever you are, there are going to be local tricks. That’s the stuff that only a magical unicorn agent is going to know. Don’t think this is everything. This is a little extra. Some things work in California. Some things don’t work where you are. It’s all the more reason to work with a unicorn realtor and not your part-time realtor cousin, which leads me to why I’m doing this episodeI got a DM or maybe it was an email, I can’t remember. A reader reached out and got in touch with me. This reader was very frustrated with the bidding wars. I said, I’m trying to spread the word about the show or reach out.” We set up a Zoom and we talked a little bit and we discussed the items that could help her perhaps win the next battle because they lost a tough one.

Know The Actual Value Of The Home

Tip number one, do you and your realtor know the sales in the area, not just what homes have sold for, but what’s happening in the bidding in your areaAre people going way over on their bids? Only an active and professional realtor is going to have this information, either from working with other buyers or interacting with their colleagues on a regular basis, sharing information. I can’t tell you the number of texts and emails and phone calls I’m getting from other realtors going, “What is up?” It’s best if you’re working with a realtor that’s in this fulltime because the inside information on the values is changing daily. It’s crucial that your realtor know that. The overall main tip that I have, the big summary for the whole episode is that you hire the best active professional and experienced realtor you can find or you’re going to be left in the dust. That’s where this Zoom call started. It turns out that she was working with her cousin, who was a part-time realtor. 

Hire the best active professional and experienced realtor you can find or you're going to be left in the dust. Click To Tweet

Let’s get back into the tips. That’s the overall tip. Tip number one, if you are looking at the list price and thinking, “That’s right at our max, but let’s give it a shot because we can pay right there up to the list price, but it’s our dream home. We want it. Do you and your realtor know the actual value of the home or is the listing agent listing that property low, or even slightly low, so they can get a whole bunch of offers? Here are some examples of this. Remember, I’m in California, and California is by the ocean, so my prices are stupid high. I have seen this with those buyers I was telling you about. A home sits at $675,000 in a $725,000 neighborhood. Another one, there was a home at $789,000 in an $850,000 neighborhood. Finally, that one with the 90 offers was listed at $625,000 in a $750,000 neighborhood. Trust me, it should have been under $750,000 because it was super dated, no joke. Grandma bought this house and then hadn’t done a thing in it for 60 years. It was a little less than the $750,000 average, but not $625,000. 

Never Offer A Round Number

My clients, because we knew the values of the area, we said, “Let’s give it a shot. It’s not $750,000. It needs $75,000 worth of work, but let’s go for it.” They offered $713,000If you’re thinking, “That’s a weird number, David,” coolThat’s tip number two. Never offer a round number because you never know what the top three offers are going to be. What if the top three offers are all $710,000I know it’s silly, but that little extra effort might be enough to put you over the top and get you the home. In all of these overbid offerswe took our shot. This was one of those multiple offers I put out. In all of these overbid offers, we never even got a counteroffer because we weren’t even in the top three offers.  

Do Not Offer Lower

It’s not a rule. The seller can counter as many buyers as they like, but some sellers have made this unwritten rule now that they counter the top three offers. That brings us into tip number three. If your market is nuts, I do not recommend that you offer lower than whatever your top number is for that house. If you do that, and most people do that because they say, I want to leave myself a little room so I can get a counterofferand then I can go up some.” You might not even get in at bat if you don’t offer that big number right at the beginning because if there’s a bunch of offers, they might counter the top three. Especially if it’s bonkers crazy in your area, then you’ve got to go bonsai big on your first offer. Don’t hold anything back. 

Waiving The Appraisal

You are protected by the appraisal. Technically, I’ve had to explain to a lot of people, you can’t overpay it. The seller’s going to work with you if the appraisal comes in low. This is also an out for you. It’s a no harm, no foul. If your contract is written and you’re keeping the standard contingency or conditions in that inspection period, the buyer beware period, then your deposit will not be in jeopardy. I would go deeper into how that works, but it can get pretty detailed. Let me explain a little bit more by moving to tip number four, which is waiving the appraisal. 

These tips involve you having some extra cash beyond your closing costs, and this is one of them. To explain it, let me combine some of the first tips that I’ve given you altogether to explain this tip number four. We’ll get back to realistic numbers. If you like a home listed at $300,000 and the area is about $325,000 for an average home. The home you’re looking at is an average home. You realize it’s a feeding frenzy right now. It’s listed at $300,000, $325,000 is average but you think, “This might go up to $350,000 or $360,000.” You talk to your realtor about it and he confirms that with you or she confirms that with you or they or them. 

That’s satisfying tip number one, that you and your realtor know the value together, or he or she, or they or them know it and they tell you about it. You think about, “We know it might go $350,000 or $360,000. Our loan approval i$370,000, so let’s offer $367,000.” That’s using tip number two, the non-round, even, regular number, and using tip number three, maxing out on your first offer to make sure that you even get countered, so you don’t get left stranded on the altar. The seller realizes that any offer over $360,000 might not appraise. That means that during the transaction, an appraisal happens. That’s where the buyer’s bank for the loan does an appraisal to get the value of the home. This value determines the total purchase price that the bank will set for the loan, the purchase price. No matter how much money you put down, they will only loan up to the price of the appraisal. 

HBH 46 | Bidding Wars
Bidding Wars: Have your lender do a full approval before you even think about writing an offer. When it’s time, show them it’s gold by showing them everything you’ve done to get approved well before this.

The seller is looking at all the offers and things. What happens if they take the highest offer that feels like it might be a little bit above where they think the home might appraise and the bank appraisal comes in at $360,000? What happens to the $367,000 that you offered? The bank is only going to loan you up to the appraised of $360,000. No matter how much you put down, you can’t increase the down and try to make it up that way. It doesn’t work that way. To get the home, what you’ve got to do is you’re going to put in your down payment, whatever it is, and your closing costs, and the bank’s going to give you the loan up to $360,000. 

In the end, if the seller decides not to work with you and accept your $367,000 and make you stick to it, then you have to bring in $7,000 extra cash and you pay that to the seller through the closing. In a normal market, sometimes that extra cash is negotiated between a buyer and a seller if an appraisal comes in lower than the agreed-upon price. Sometimes you negotiate to the middle. Sometimes this extra cash is negotiated between the buyer and the seller. Maybe if you agree on a price and the price comes in low, then maybe you negotiate to bring in half of that amount of cash. 

Golden 3.5% Loan

You do have the option in a crazy market like this to waive the appraisal with your original offer, and that lets them know that no matter what the bank says the home is worth, you’re willing to pay the difference in cash to get your first offer accepted. It gets you to the top of the pile, which brings us to tip number five. Many people tell me they don’t want to battle it out because there’s no way that a 3.5% down payment offer the FHA loan is going to get accepted. Tip number five is your realtor’s job is to show that your 3.5% loan is just as golden as the 20% down payment. You’ve got a battle and show, “Money is money.” That means you have to show that your 3.5% down payment is a real, legitimate loan. Have your lender do a full approval before you even think about writing an offer. When it’s time, show them it’s gold by showing them everything you’ve done to get approved well before this. 

Guarantee From Your Lender

Tip number six is this. To make it look even better is a guarantee from your lender. How can they do that? They can reduce the contingency or condition period on your loan. Most of the time, you’re going to have a period from the time that you open the contract. You’re going to have a matter of 10, 12, 14, 17 days before you remove your contingency or condition on the loan, thus saying, I’m all good.” What we’re doing right now is we’re doing so much work ahead of time before our buyers even write an offer, that when I write the offer, I remove that loan contingency or condition immediately right with the offer. 

Involve The Lender

It’s the number one reason that escrows fall apart is the loan. What I’m telling the seller and the seller’s agent is, “We’re all good. Don’t even stress about the loan. All we’ve got to do is do our inspection. As long as there aren’t vampires in the attic, we’re good to go. If your unicorn realtor is good, they’re going to have referred you to a rockstar lender that can do that for you. Tip number seven is having that rockstar lender get involved, not after the offer gets accepted, but when the offer gets presented. Have him call right away, talk to the listing agent to tell them, I’ve checked these dudes out for months. We’ve got all their paperwork. They’re ready to go. I mentioned the 3.5% down, a lot of people are telling you that FHA loan might be a problem. Do not believe that. That’s old-school dinosaur talk. I’ve personally helped 103 first-time home buyers. Most of them have used an FHA loan all the way back to 2006. 

Real estate is two things. Time and money.  Click To Tweet

Back then, we were hearing about it. We started to beat that myth a long time ago, and it’s crazy. At one point, FHA loans, many decades ago, were difficult because they don’t want people to use FHA loans to buy homes as an investment. You can’t buy a total bidder, but nowadays the only thing is the house has to have a heater and it has to be safe. That’s pretty much it. Most homes you’re going to make an offer on, they are. Remember back to the whole appraisal thing that may have confused youthat’s another reason why maybe 3.5% down is better than 5% or 10% down. You might get looked at differently from 3.5% down to 20% down, even if your lender calls and you do all that stuff. Sometimes they’re still going to look at it differently. 

The seller and the seller’s agent, there’s no difference between 3.5% down and 5% down, like there’s no difference between 5% down and 10% down. There’s a big difference if you can show the listing agent in your verification of funds, that’s the bank statements that you send along with the offer to show them that you have the down payment and the closing costs. If you can show them more, show them that you’re not squeaking by and that you’ve barely got the down payment and the closing costs, that you have extra cash. The seller knows that you can use that to sweeten the deal once you’re under contract. 

Extra money means to the seller that you’re not going to nickel and dime them for repairs, credits, money for termites or one of the many other things that might come up in the inspections in whatever part of North America you’re in because we all have different stuffseptic or radon. Instead of stretching to put 5% or 10% down, drop down to a lower down payment and make sure that your realtor and your lender show them that low down payment is just as gold as a 10% down payment. Make sure your realtor shows them the extra cash you have above and beyond the down payment and the closing costs. Show that extra cash. 

Waiving Traditional Things

In your offer, you’re going to have lots of little things and some not-so-little things that can sweeten the deal for the seller and give them more profit. I’m talking about a way to give them more profit without increasing the purchase price. Tip number eight is if you and another buyer offer the same price, but you’ve waived many of all the traditional things the seller pays for, then their net profit goes up. Traditionally, the seller is going to pay for it, it depends on where you are in the country, but like here, they always pay for the termite work and the home warranty, some of the city and local inspections, maybe some local transfer fees or taxes. They’ll pay for the document fees from the HOA or other places. The fridge and the washer and dryer in my area, they’re always negotiable. If the microwave isn’t attached to anything, then that’s something else. 

Max Out Time

The reader that I was Zooming with told me, “We waived everything.” They didn’t ask for anything. They offered over the list price. They waived the appraisal and they didn’t ask for any extra stuff. They said that they were going to pay for all the stuff, the warranty, the termite, everything, and they even offered a free 30day rent back which leads us directly into tip number nine. You regular readers have heard me say it a million times. Real estate is two things: time and money. In a bidding war, you’ve got to max out both. We’ve gone over how you can max out the money, but what about the time? First, you have to be in a flexible position on time. I can’t stress this enough, the more flexible you are, the better deal that you’re going to get. 

HBH 46 | Bidding Wars
Bidding Wars: Make sure that your realtor and your lender show the seller that that low down payment is just as gold as a 10% down payment.

One of the ways you’d be flexible as you found out a long time ago, can your lender move faster than 30 days if that’s what the seller wants? Can you move faster than 30 days if that’s what the seller wants? These should both be sorted out long before you go into battle. If you don’t know this stuff and you get in a battle, then you’re the soldier with the bow and arrow while the other guys have machine guns. What about the other scenario where the seller is maybe trying to buy a home and they need time? They ask you if they can stay in the home after the sale while they keep shopping or closing on their property, and then they’re going to pay you rent. That’s the rent back. At the close of an escrow here or the close of the contract, if you’re in another part of the country, you now own the house. They stay in it for 30 days, they have to pay you rent. 

How are you with the time on that? Can you be flexible with that? Can you offer them that time? What my reader friend, who I was Zooming with and her part-time realtor cousin did was smart. They offered that time to the seller because the seller needed the time. They offered the 30-day rent back, but it was just a 30day back. There was no rent. They said, “You can stay in there for 30 days.” Typically, that would have been about a $3,000 rent. What they did was they upped their profit by $3,000 without having to raise their price, which gets a little complicated, but if you think about it, that can help the buyer. You can put in your best offer and by doing that $3,000 free rent back, you’re not having to mess with the appraisal in bringing in extra cash. 

It’s a little convoluted, it’s a whole bunch of stuff but think about that. You have the opportunity to pay them $3,000 more without your price being scrutinized with the appraisal. If you waive the appraisal, then you’re going to be bringing in extra cash. That saves you there. Good move on the part of the part-time realtor cousin. Spoiler alert, he blew it and they lost the house that they really wanted. They probably could have gotten in with an experienced pro, but that’s why we’re doing the show. I’m here to help. Let me give you three more tips before I tell you the cousin punchline. It sucked. It broke my heart. I did ask her if I could tell her the story and she’s like“Please, go ahead. If it helps other people, let’s do it. 

Counteroffers

Tip number ten is counteroffersCounteroffers can leave you lots of opportunities to separate yourself from the pack. First of all, congratulations, you’ve got one. You’re in the mix. In my area, people are using this thing in their counteroffers called the escalation clause. If the seller is countering all the buyers without a price, which a lot of them do, it’s saying to everybody, “Bring your highest and best price and terms. That’s the way that most people write it. It’s a poker game and they don’t want to give anybody a number and see who comes back. They want everybody to bring in their best and you all have to do it blind. 

You can respond with a number or you can respond with a number and an escalation. Let’s say you’re offering $368,000 or $368,000 or $2,000 over the highest offer. What you do is you cap it. You say, “We’re offering $368,000, but if someone offers $370,000, we’re going to go $372,000, $2,000 over the highest offer over our $368,000. You cap it and you say, “We’ll do that up to $375,000 or $380,000. We’re not going $2,000 over if someone offers $400,000.” That way, if somebody beats you because you’re in that blind guessing game of highest and best, you can get in there. You can get a little tricky with the escalation if you’re doing things with the appraisal and the cap. 

You Need A Pro

If it sounds complicated to you, it is. That’s why you need a full-time unicorn pro representing you. In tip number eleven, this is something that reiterates the fact that you need a pro, because I have been doing tip number eleven for years, and now it became pretty much almost illegal. It’s not illegal, but it is strongly recommended against by the National Association of RealtorsThey’re discouraging everyone from using those love letters, that little personal letter that you send to the seller along with your offer telling them how much you love the home, and maybe a little backstory on yourself hoping that they find some connection with you. 

The National Association of Realtors said, “Don’t do it. It could open up you, your realtor, and you as the buyer to lawsuits. It has a lot to do with discrimination. You’ve got to think logically about it. There’s a potential for discrimination there. People are picking people because they like certain people, then put the shoe on the other foot could because they don’t like other people. That’s discrimination. That whole love letter thing is gone. If you’re out there looking to buy a house right now, and your realtor is suggesting that you should do one, that means either they play it fast and loose, and are not concerned about the liability, which should scare you, or it means they’re not active enough in real estate who have seen this announcement, which has scared you even more. I’ve seen this announcement 3X or 4X a day for weeks now, whether it’s a Clubhouse group or a coaching group or whatever. Everybody is talking about it. If your realtor doesn’t know that, who knows what else they’re missing? 

Efficient And Professional Offers

With my reader at the end, I gave her tip number twelve, which was especially important since her cousin was a part-timer. I said, I know it’s silly, but the presentation of the offer, the way the offer gets to the other agent, it needs to be super-efficient and super professional. This is what’s happening, they show the homes on Saturday and Sunday, then Sunday nightthey might be looking at 1020 offers. The way that email is sent to them, that’s everything. They’re trying to get something done on a Sunday night. Who wants to stay up late on a Sunday night, except for idiots like me? That package better be tight. It’s easy to skim, easy to look at the facts, everything is in one PDF, not in six PDFs that they have to open. If I do open the PDF, everything is in the right order to read and present. Not only am I looking at it, but I’m presenting it to the seller. That’s me if I was the listing agent. 

You have to think of them as they’re busy, send them something gorgeous. All kinds of crazy little stuff like what’s in the subject line of that email because if they’re being bombarded with all the emails on their hot property or maybe multiple hot properties, they want it to be simple to understand. Is the lender copied in the email with his or her phone number to confirm the loan? Does the overall email show respect for that busy listing agent by being clean and easy to digest while also showing the professionalism and strength of the offer from your side? I will teach this class sometimes to realtors in my area and the brokers when they haven’t gone in and do it, they call the class presenting the offer. 

I immediately changed the name when I teach it. Presenting the offer is the dinosaurs harking back to the old days when you used to walk over to the person’s office and you would present a contract to them. I call it packet presentation because you are judged by that packet, and that packet is an email. You’re judged on everything. You’re judged on your email address. If I see AOL, it’s trouble. If your email signature says, “LoveDave.” If I’m a listing agent and I see not a professional real estate signature at the bottom and AOL or Prodigy, I immediately sense and I know that it’s not an experienced agent on the other side. Your agent and the way that they present your offer, the way that they text the other agent, the way that they call the other agent, it’s all being judged. Those of us who are in the trenches every day can smell the novices a mile away.  

At some point, we will share this with the sellersA number looks good on paper, but it came from [email protected]AOL.com. I have another offer right here, it’s $5,000 less, but this comes from Joe at Joe’s Realty. Look at all the extra information that Joe provided in the email. We talked about the buyer’s lender and the finances. As a matter of fact, I know Joe, you’ve probably seen his signs around town. There’s another little trick about that for you. If I don’t know Joe, if I’m representing the seller and I’m the agent, I can go on the MLS and look up every single realtor stats and see how many homes they’ve sold. All that information is there for realtors. It’s there so that we can look up and make sure that a professional can deal with a professional, just like you want a professional like me calling your agent and going, I’d like to present an offer. I’m not nervous, it’s just late. 

Getting back to the story, how about that? As we get ready to close the Zoom with my reader, I told her, “It does matter. All these presentation stuff matters.” I’m sure that many sellers will google the realtors that they’re bringing in. I told her all that’s going to matter. I said, “The good thing is I’ve looked at a lot of other stuff that your part-time cousin didthere’s not much more that I could advise you. It sounded like he did a good job for a part-timer. He’d been doing it for a long time, but not a lot every year. I told her it’s a tough battle. It’s hard out there and she should hang tough. 

I had one more tip for her. I said, “I forgot to mention this to you, make sure that you max out your earnest money deposit. That initial deposit that you put as a sign of good faith, make sure you are doing 3%. How much are you offering? She goes, “My cousin said 1%.” I can explain to you, those numbers could be different in your part of the world. I could explain to you forever how the contract protects the earnest money deposit. In California, we have the rules that up to 3%, you’re fine and protected. As long as the buyer and the seller both work in the contracted timelines and in everyone’s good faith, then there’s no way that’s an issue for anybody. I summed it up like that. 

By putting 1%, it shows me that you don’t work in the area, you don’t understand the area and you don’t understand the contract. It tells me everything I know about the realtor. I need to know about the realtor. Those numbers aren’t going to be the same for you wherever you are, but whatever the norm is, anything in a contract that is the norm, your agent can speak volumes by not doing that to try and “protect the buyer. All that does is show me they don’t understand the contract and that they are trying to protect the buyer by not having the confidence in themselves and the way the transaction works to realize that’s protective as long as you follow all the guidelines within the contract. 

The more flexible you are, the better deal that you're going to get. Click To Tweet

She says, I was wondering about that. Do you know what else with that free rent back? A while ago, he sold my house to their uncle. They did a rent-back with the sellers. They didn’t leave after 30 days. The sellers didn’t go. It was this huge ordeal. It was a major issue. When he decided to do the free rent back for us, we did it, but what he did was, because he was so freaked out that something would happen with us like what happened with his uncle, he put a $20,000 penalty if they didn’t leave at the end of 30 days.” Jaw on the floor. 

There are several ways to protect your buyer and a rent back contractually, but $20,000 penalty? That is not one of them. What the hell do you think the sellers thought when they saw that? Do you think they even looked at anything else on the deal? “Thank you very much for your offer. I see here that you’re saying, by the way when we get your house, at the end of 30 days, if you’re going to be homeless, we’re also going to demand $20,000 from you. We laughed about it. I wished her well. Now, like you, she’s armed with a few extra tips to help in her next bidding war. 

The biggest tip, would you rather have a slightly uncomfortable moment at the family reunion with your cousin or would you rather save tens of thousands of dollars on the biggest purchase of your life or rather get the dream home and have an opportunity than miss out? I hope this helped you. I know this helped my reader on the Zoom. It was fun. I’m sure she and her cousin are going to have an interesting conversation. As for youthese are some. I’m sure there’s more in your local area. If you’ve got specific questions, I’ll do my best. DM me on Instagram, go to the website, DavidSidoni.com, and contact me right through there. It’s pretty much the fastest way to get to me. Fill out the little contact form. That stuff comes right to me immediately. 

If you want help finding a unicorn in your area, I can help you with that. DM me, check me out on the website. There is a How TBuy a Home Facebook group, where we have other readers telling stories to each other and talking, check us out there. You can also check me out on YouTube. That’s on my website or on YouTube, search David Sidoni. There are more tips there. Subscribe there. Share this with your friends please. If you have a moment, write the show a review so we can the word out to everybody because you deserve the best. If you don’t have a unicorn and you don’t have the best right now, you could get slaughtered in this battle, but the fight is worth it. You want to go into battle with a general. Good luck to you all. Remember, you can do this. 

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This podcast was started for YOU, to demystify things for first time home buyers, and help crush the confusion. After helping first timers for over 13 years, I knew there wasn’t t a lot of clear, tangible, useable information out there on the internet, so I started this podcast. Help me spread the word to other people just like you, dying for answers. Tell your friends, family, and perhaps that random neighbor you REALLY want to move out about How to Buy a Home! A really easy way is to hit the share button and text it to your friends. Go for it, help someone out. And if you’re not already a regular listener, subscribe and get constant updates on the market. If you are a regular and learned something, help me help others – give the show a quick review in Apple Podcasts or wherever you get your podcasts, or write a review on Spotify. Let’s change the way the real estate industry treats you first time buyers, one buyer at a time, starting with you – and make sure your favorite people don’t get screwed by going into this HUGE step blind and confused. Viva la Unicorn Revolution!

 

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