How to Negotiate a $5M Silicon Valley Home

"You should talk to my dad."

A buddy I had made during my time at Homestead reaches out after seeing recent success across my Instagram. A friend had turned into a client, and their journey to LAH had begun.

This was in the July of 2022. The fed had just raised rates, and indexes fell 15-20% across the board (from memory). Demand was a bit night and day which is seasonally true around late Summer going into Fall, but the impact of this perfect storm was very visible because just a few months earlier we were at all time highs with historically low rates. It felt relatively slow.

We explored 10-15 homes, wrote a couple offers, but the stars hadn't aligned.

12380 Priscilla Ln came on the market. It was initially over their ideal price point so we didn't give it much consideration. Then it sat for 31 days - hmm maybe we can make this work.

I was about to make $125,000.

But I had comfort. I had just closed $22M at 19 years old. I had the high spec sports car, cushion in my TD Ameritrade brokerage account, and no responsibilities outside of work.

This transaction came at a time where I didn't care if we walked away. There was no attachment to the financial incentive.

I was able to utilize every single tool and trick I learned competing (and winning) the year prior in a 3% interest rate atmosphere, without restriction. It was flow state.

We formulated a game plan and anchored low.

I should preface this by saying an aggressive strategy like ours only works when there is a trifecta of things happening. We spent 7 entire days negotiating with the sellers before ratification; the risk of another buyer entering the conversation at any time was real.

Luckily a rate shock, drop in indexes, seasonality changes, and some layoffs created a small window of opportunity in the market for us.

YOU CANNOT TIME THE MARKET. WE WERE PRESENTED IDEAL CONDITIONS.

I encouraged my client to open at $4.1M and let the sellers win on terms (rent back, non-contingent, quick close). An 18% lower than list ($5M) offer on a special property with only a few weeks of market exposure. The kind of property we would have found ourselves in an overlist, multiple offer scenario that same April.

We anticipated a spectrum of outcomes and planned 5 moves ahead.

This is an atypical number of back/forths; reiterating the opportunity we had and with zero FOMO. Over-tightening is very much a thing and can offend a seller who was once willing to work with you.

It felt like David Vs Goliath.

Michael Repka, former real estate attorney and broker of record at DeLeon Realty, was the listing agent. A veteran in contract law and a portfolio with some of the highest priced sales across the SF Bay Area. They have been in the business for decades and have represented clients from Fortune 500 C-suite to tier-1 VC partners; "the top of the food chain" by Silicon Valley standards. DeLeon is good at what they do.

They responded with a counter at $4.85M. Their initial stance was "nothing under list" but here we were in conversation. And a week later in contract at $4.38M.

Now what happened between their inital counter to our contract price is a blackbox.

With similar conditions and with the Agnsy platform, I can possibly achieve a marginal improvement (since this was textbook), but offer a $93,000 credit from our commission for a cost basis of $4.29M.

TLDR

You need a window of opportunity in the market where a couple factors are affecting local demand, let them win on terms so we can get an excellent price, have no urgency, and more importantly your representation must be willing to overlook a six figure check.