November 6th, 2020
Many areas of the country are experiencing unprecedented lack of inventory. This low supply even with normal amounts of demand, creates an imbalance which suggests continued price appreciation. As sales of Palos Verdes homes occur at ratcheted higher levels relative to recent competitive sales due to not uncommon multiple offer scenarios from many buyers on a single home, Buyers must consider strategies that provide “an edge” in negotiations such as “Love Letters” to the Seller. But do buyer love letters to sellers help? How do they help? Are there unintended consequences? If you’re a buyer, what do you put in these letters.
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Even in markets where more balance exists between buyers and sellers, buyer love letters can help in taking a bit of the pain away from offer prices that are less than what a seller expects. I’ve observed in my 37+ years selling Palos Verdes homes and Beach Cities Real Estate, times when Sellers took a bit less than what they thought they would take because they could identify with a Buyer. How can you tell if it’s a Buyer’s or Seller’s market?
Did you know that if you Google Search “letters from buyers to sellers” there were 10,800,000 results. Seriously! There’s no shortage on how to write such a letter. Advice falls into a couple of different categories…
Charateristics of the property. The Buyer’s task in this scenario focuses on making assumptions about what the Seller enjoyed most about the property and then write about how you as the Buyer share in that affinity. “I know that our collies will love romping in that back yard just as your Labradors do”, or maybe “We will give your vegetable garden the same loving attention that you did”
Personal similarities between the Buyer and Seller. One of my clients did a facebook search on the Seller and discovered a love of BBQ. My client wrote a couple of paragraphs making the Seller visualize how my client would entertain and utilize the BBQ set up the Seller created.
Is one method better than the other? Who knows. That would take reading minds, so my advice would be to employ both categories
I wrote earlier here asking about unintended consequences. Yes, they can be quite severe in fact. Look, it’s simple, if you write a letter that makes the seller perceive … and perception is what is important here, not reality … that you love, love, love the house that WILL hurt you in secondary negotiations. How so?
Nearly every transaction has two phases of negotiation. The first is when Buyer and Seller negotiate price and terms. Often, in low inventory high demand markets, the power in negotiations is with the Seller; especially when there are multiple offers. But then one and only Buyer prevails and opens escrow. Guess how the pendulum of power swings. Due diligence inspections and investigations now occur. Now what if in “winning” the property, the Buyer wrote a glowing love letter to the Seller.
Do Buyer Love Letters to Sellers Help in a Competitive Real Estate Market
Now the Seller perceives that you’re so in love with their property that the request for repair that you make after your inspection, are not so serious. They perceive that you will concede on your requests. After all, didn’t you just a few days ago tell them how much you love their property. You’ve just created a situation in which you, as the Buyer, won’t get what you hoped in concessions, or utterly offended the Seller so much because now you’re being perceived as a duplicitous liar, the transaction just blows up.
So Do Buyer Love Letters to Sellers Help? The answer is, IT DEPENDS. Crafting these letters is an art form. Contact me and let’s talk about it.
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