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In a bidding war for an apartment, how important is it to write a personal letter to the seller? What should it say, and not say?
Cash goes a long way, but sellers can also be won over by something more intangible, according to our experts. That thing is a heartfelt expression of your interest in the apartment.
"Almost every seller has an emotional attachment to his home and hopes his buyer will love his home as much as he does," says Deanna Kory, a broker with Corcoran.
Writing the seller a personal letter can help you make a connection, and possibly give you an edge over the competition. In fact, when analysts for the brokerage Redfin looked at sales data from 2016 and 2017, they found that penning a personal cover letter to the seller improved a buyer's chances of winning a bidding war by 52 percent.
Redfin's data was culled from agents around the country, but bidding wars are rampant in New York, as are all-cash offers.
"I don't think many in the market appreciate how prevalent bidding wars have been in Manhattan over the past five years," says Jonathan Miller, head of the appraisal firm Miller Samuel. Miller estimates that nearly 12 percent of all apartments sold in the fourth quarter of 2017 sold above their last asking price, a strong indicator that bidding wars were probably involved. Moreover, Miller says, almost 50 percent of fourth-quarter sales were all-cash transactions.
"Since these situations seem to be embedded in the daily transaction of residential resales, you can bet many buyers are anxious to have the edge and win the war," Miller says. "Paying cash isn’t enough to differentiate a buyer, so the letter-writing strategy makes sense, if not to win, then to at least be in the running."
So how does one write the perfect letter? This may be one occasion that justifies a bit of social media snooping.
"I find knowing who they are and perhaps seeing Facebook or Instagram posts can aid in crafting an excellent letter," Kory says.
Think too about what the seller has invested in the apartment over the years. You'll want to show in your letter that you're aware of the love and care he or she put into the home. Also ask your broker for input. An experienced agent will understand the needs and concerns of both buyer and seller, and should be able to help you draft or revise the letter.
"I have won bidding wars with a superbly crafted letter, won an apartment at a lower number than another bidder with such a letter, and re-engaged a seller when negotiations have broken down," Kory says.
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