As single-family homes in San Francisco continue to sell over asking price, buyers and their agents are trying anything to head off the competition.
The practice of “love letters” — the tactic of bidders passing personal messages along to the seller to woo them — is alive and well in the city, despite attempts by the National Association of Realtors to discourage such long-standing practices. NAR argues that the letters raise fair housing concerns and could open real estate professionals and their clients to fair housing violations.
However, with no outright ban, such notes of attempted endearment have risen in prominence since the start of the year as a tool to help buyers compete against multiple offers in an environment where the average sale price for a home is 103% that of the listing price.
“I think that honestly, even though we’re trying to get rid of the love letters, they continue to be important when the offers are close and when a seller is deciding whether to counter,” Keller Williams agent Jennifer Rosdail told me. “I think that they continue to be important to humanize the process for sellers.”
However, as some buyers have gone so far as to include entire photo albums of themselves, Rosdail said she is in favor of limiting the photos, especially to help curb any possible discrimination.
She said the best love letter one of her sellers ever got was one in which the potential buyers matched a very distinctive wallpaper in a custom-made card.
“It still didn’t work,” Rosdail said. “She just wanted the most for her house.”
Other tactics house hunters and their agents are using include “preemptive offers” — where a buyer submits an offer made before the seller’s designated date to hear all offers — and “escalation clauses” — where an offer guarantees to beat any other offer by a fixed amount up to a certain price. Rosdail told me she successfully used a preemptive offer earlier this month.
Jennifer Lind, president of Coldwell Banker Realty Northern California, told me it’s common now for sellers to get anywhere from 10 to 20 offers on a home in the city, leading some nervous buyers to use an escalation clause to try and win out fast. While they are rare, Lind said more Coldwell agents have been forced to navigate such legal territory lately, with mixed reviews.
One criticism of escalation clauses, she told me, was that the buyer is tipping their hand as far as how much they are willing to spend on the home. However, it can also mean a bird in the hand for an eager selling looking to cash in on high home prices now.
“We are sometimes seeing these buyers coming in and they just blow everybody out of the water with this super high number,” she said. “The part that has been very difficult has been to try and get appraisals to come in properly and help buyers understand how much to come to the table with.”