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Tuesday, June 18, 2024

Home-Buying Offers Reach Unordinary Measures

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Buyers are listening to an agent’s introduction at an open house.

As Southern California’s real estate market continues to rise in value with sellers now enjoying more power than ever, buyers are reaching towards a new frontier with their offers. Some buyers are offering cash to drive down the homes’ listed prices, while others have offered heartfelt letters and gifts to win over the sellers.

A Los Angeles-based home-seller, only identified by his last name Lee, recently agreed to sell his house for $1.15 million. After reaching an agreement, the buyer offered Lee $350,000 in cash to sign the deal off at $800,000.

For the buyer, covering a part of the total cost with cash could eventually lower the property tax. For Lee, who bought the home for less than $500,000 years ago, taking the cash was a way to save tax money on his own.

However, Lee turned down the offer after a careful consideration. The feeling of making an illegal transaction threw him off a bit. He also felt scared about storing so much money in cash.

“I was tempted for a moment as I could have saved tens of thousands of dollars on taxes if I took the cash,” Lee said. “Then, I started feeling scared as it felt like I was committing a crime. Eventually, I turned down the offer in the end.”

In a separate case, a homebuyer, only identified by her last name Jeong, wrote a letter to the seller amid a fierce battle for a home in La Crescenta. After following her agent’s advice, she wrote a handwritten letter to the seller to explain what it would mean for her to buy the home that she has wanted so much.

“I did wonder if I was going too far,” said Jeong, who successfully convinced the seller later on. “I felt anxious about simply making an offer and waiting. I explained that I really wanted to buy the house for my family. Thankfully, I think my efforts paid off. The seller also wrote to me later on, wishing me the best of luck at a new home.”

Another seller, only identified by his last name Han, also had to choose one buyer out of many who wanted his condominium in L.A. Koreatown. The offers did not differ in prices, but the chosen buyer did not make the highest bid. However, it was the buyer’s heartfelt gesture that convinced the seller.

“I initially was about to choose an offer that proposed the highest bid,” Han said. “That’s also what my agent advised me to do, but I was moved by the gift that I received from the buyer. It was clear that the gift was prepared with sincerity. I was convinced that someone so genuine would cause no trouble through the formalities of submitting the paperwork as well.”

Industry experts said that the rising demand for homes in Southern California has given birth to drastic measures taken by the homebuyers.

“You can obviously end up winning the competition if you offer the highest amount of money,” said a real estate agent. “But we all know that not everyone has the capacity to simply spend as much as he or she needs. That’s what prompted the competition to win over the sellers’ hearts. Buyers are now writing letters and offering gifts, while some even provide accommodation for sellers who may need time to look for a new home.”

However, critics suggest that the recent trend is strikingly similar to the collapse of the home market about a decade ago.
“Back in 2005 and 2006, buyers were sending letters and gifts as well,” said another real estate agent. “Under normal circumstances, the sellers are the ones who should thank the buyers. The recent trend is clearly abnormal, but it’s understandable in a way.”

By Hyunwoo Kim