I am obligated, unless notified in writing by the seller, to present all offers and therefore if an agent representing a buyer calls me and states their buyer would like to make a verbal offer I will take the offer and present it to my seller.
When I do this I tell my seller upfront this is a verbal offer and if they choose to accept it the offer will be written. Anytime I have received a verbal offer it usually consists of two points; the price being offered and the approximate closing date.
I fail to understand why this would be the means to present an offer. The FARBAR contract, which is the standard contract used by REALTORS® in the State of Florida is four pages. The price and closing date are two of the many blanks. In my opinion price and closing date are extremely important, but of equal value are repair amounts, inspection periods, financing conditions and good faith or escrow deposits.
For instance, say the buyer’s agent states they want to offer $100,000 and close in two weeks. This is the verbal offer. There are no other details given even after I ask if there are any special considerations. I present it to my seller and they agree to accept the offer. I call the buyer’s agent and the agent puts the offer in writing. When I receive the written offer I discover the buyer has put down $500 in good faith, wants a ten day inspection period, needs to close on their home which is under contract and set to close two days before the specified closing, and wants the seller to pay up to $1,000 in repairs.
Suddenly a verbal offer which sounded really good has too many pitfalls and the seller who was excited about selling their home has to consider the offer in a whole new light. Now if the buyer’s agent had let me know about the additional details then I could have advised my sellers appropriately at the outset.
I honestly believe the buyer’s agent is acting in good faith when he/she conveys the verbal offer but if I were to have a buyer who was interested in making a verbal offer I would ask them to provide as many details as possible. I understand a buyer’s desire to approach a seller with an offer verbally at first in order to get a feel for the seller’s motivation. However I do not understand why a buyer would not give concise details that affect the ability to reach the closing table.
There have been times when a buyer I was working with has requested I make a verbal offer. When this request is made I pull out a blank FARBAR contract and go over it in detail. I do this so the buyer understands more goes into an offer than the price. At this time I also find out if the buyer has any special contingencies that might affect the seller’s desire to accept the offer. I am then able to contact the seller’s agent with a verbal offer which has some meat to it so if the seller agrees there are no surprises when that written offer is presented.
In my opinion verbal offers leave too much room for misunderstandings. I say if you are serious about making an offer, put it in writing.
Friday, December 12, 2008
Buyers -- What a REALTOR Does for You (Part 3)
Up to this point I have met with the buyers, viewed properties with them, researched those properties, presented an offer to the seller’s agent or seller and negotiated the offer to reach a legally binding Contract for Sale and Purchase. (See Part 1 and Part 2 to this post.)
Once the contract is signed the specifics of the contract have to be met. Usually there is an inspection period. It is during this time period when the buyers hire a home inspector to perform an inspection, an inspector to perform a wood-destroying organism inspection and any other inspections the buyers require. As a rule I attend these inspections with the buyers. I attend in order to represent the buyers’ best interest. I also attend because I learn so much about construction and the operating systems of a home.
Hopefully the home inspection does not reveal any major defects. But if it does, I explain the buyers’ options in this situation. If the buyers want the defects to be remedied I present an addendum to the contract stating exactly what remedy the buyers’ desire. The seller may or may not agree to accept the addendum. Once again there are negotiations where I represent the buyers to reach an equitable solution.
Once an agreement is reached and we are still under contract I continue to work for the buyers. Most of this work is behind the scenes and typically involves checking in with all parties to make sure the specifications of the contract are being met, financing is in place, the title is clean and everything is still on track to close on the specified date.
Sometimes this period is quiet as everything smoothly progresses. Other times I can be on the phone or running from one place to another trying to resolve an unexpected issue.
As an example, recently I had to locate a contractor to complete a repair required by the lender prior to closing and negotiate with the seller’s agent an agreement to get this done. The contractor I originally had scheduled failed to follow through and I had to find a substitute who could complete the repair in 72 hours. I did find a substitute but in the meantime negotiated with the lender to close and hold back funds in case the repair could not be completed. I spent no less than thirty hours over a two week period resolving this one issue while still working to make sure not only this buyer would close on schedule but also working with other buyers.
Prior to closing I have received and examined the settlement statement. The settlement statement shows exactly what money went where. The settlement statement (or HUD as it is commonly called) has one column for the buyers and one column for the sellers. Each column has debits and credits relating to the transfer of the property.
On the way to closing I accompany the buyers on a final walk-through of the property. This is done to make sure the buyers are receiving the property in the condition under which the contract was made. This is an important step. You really don’t want to know what I have seen to convince me this is absolutely necessary.
Hopefully all the above has worked out and the buyer and I arrive at closing. I don’t appear to do much at closing beyond sit there, however I am there to make sure there are no surprises. I am pleased to report that it is only on rare occasions that something comes up to prevent closing and even if something does come up it only delays closing.
At this point I hand the keys over to the buyers and welcome them home.
Several days after closing I call the buyers and make sure their move went smoothly. I answer any questions they may have and let them know I will check in with them periodically.
I hope this series of posts has been helpful.
Once the contract is signed the specifics of the contract have to be met. Usually there is an inspection period. It is during this time period when the buyers hire a home inspector to perform an inspection, an inspector to perform a wood-destroying organism inspection and any other inspections the buyers require. As a rule I attend these inspections with the buyers. I attend in order to represent the buyers’ best interest. I also attend because I learn so much about construction and the operating systems of a home.
Hopefully the home inspection does not reveal any major defects. But if it does, I explain the buyers’ options in this situation. If the buyers want the defects to be remedied I present an addendum to the contract stating exactly what remedy the buyers’ desire. The seller may or may not agree to accept the addendum. Once again there are negotiations where I represent the buyers to reach an equitable solution.
Once an agreement is reached and we are still under contract I continue to work for the buyers. Most of this work is behind the scenes and typically involves checking in with all parties to make sure the specifications of the contract are being met, financing is in place, the title is clean and everything is still on track to close on the specified date.
Sometimes this period is quiet as everything smoothly progresses. Other times I can be on the phone or running from one place to another trying to resolve an unexpected issue.
As an example, recently I had to locate a contractor to complete a repair required by the lender prior to closing and negotiate with the seller’s agent an agreement to get this done. The contractor I originally had scheduled failed to follow through and I had to find a substitute who could complete the repair in 72 hours. I did find a substitute but in the meantime negotiated with the lender to close and hold back funds in case the repair could not be completed. I spent no less than thirty hours over a two week period resolving this one issue while still working to make sure not only this buyer would close on schedule but also working with other buyers.
Prior to closing I have received and examined the settlement statement. The settlement statement shows exactly what money went where. The settlement statement (or HUD as it is commonly called) has one column for the buyers and one column for the sellers. Each column has debits and credits relating to the transfer of the property.
On the way to closing I accompany the buyers on a final walk-through of the property. This is done to make sure the buyers are receiving the property in the condition under which the contract was made. This is an important step. You really don’t want to know what I have seen to convince me this is absolutely necessary.
Hopefully all the above has worked out and the buyer and I arrive at closing. I don’t appear to do much at closing beyond sit there, however I am there to make sure there are no surprises. I am pleased to report that it is only on rare occasions that something comes up to prevent closing and even if something does come up it only delays closing.
At this point I hand the keys over to the buyers and welcome them home.
Several days after closing I call the buyers and make sure their move went smoothly. I answer any questions they may have and let them know I will check in with them periodically.
I hope this series of posts has been helpful.
Buyers -- What a REALTOR Does for You (Part 2)
At this point I have met with the buyers, viewed properties with them, researched their choices and presented an offer to the seller’s agent or seller. (See Part 1 of this post.)
The seller usually has a day or two to consider the offer. Sometimes the seller will accept the offer as presented but more often than not there is some type of counter offer and negotiation. During negotiations I work to reach an equitable deal for the buyers as the seller’s agent is looking to negotiate the most equitable deal for his/her seller.
The price is not the only point negotiated in the offer. Although the price is an extremely important factor sometimes sellers are better served by taking a lower price in order to close earlier or remove other contingencies.
In order to negotiate effectively I have researched past sales for the area and other homes on the market. If there is financing involved I have spoken (with the buyer’ permission) to the lender about rates, payments and timeline s for closing. I want to make sure the offer being submitted is valid and can be fully executed. I have also searched public records in order to find out as much information on the home as I can, such as what the seller owes on a mortgage and if renovations have been properly permitted.
Sometimes an offer can be made on a property and it is automatically accepted with no negotiation. Other times there can be an incredibly lengthy negotiation with several offers and counter offers. As an agent it is my responsibility to keep track of all points of the negotiation and relay them to my client.
There are several things to remember during negotiations.
1. Once an offer or counteroffer is made it can be withdrawn if it has not been accepted by the other party even if it is prior to the time of acceptance period stated in the offer.
2. Once a counteroffer is made the original offer is terminated and can no longer be accepted.
3. A seller is not required to entertain or negotiate an offer.
4. A seller does not have to accept an offer even if it is a full-price offer.
5. If a seller receives multiple offers, the seller is under no obligation to negotiate the offers in the order they are made.
6. Unless otherwise stated inspection periods and other contingencies usually refer to calendar days not business days. Make sure contingencies for inspections, financing and appraisals allow enough time to complete the contingency.
7. A contract is not valid until all parties have signed the contract. The effective date is the date the final party signs the contract.
Although it is not required, I prefer all offers and counteroffers to be written so there can be a record. When an agreement between all parties is reached the offer should be written and then signed and dated by all parties to the contract.
Once all parties are in agreement and the final agreement has been signed and dated by all parties we have a valid contract for sale and purchase.
In Part 3 I will explain what a REALTOR® does from the time there is a valid contract until closing.
Buyers -- What a REALTOR Does for You (Part 1)
Lately I have met with quite a few buyers who don’t want to work with a REALTOR®. The reasons are varied but they all really boil down to one fact, the buyer thinks they can buy a house without representation and get a better deal.
Let me put value into what a REALTOR® can do for the home buyer. Buying a home is more than locating a house, making an offer and then paying for it. Although that is possible, there are details that should not be overlooked.
As buying a home is a lengthy and involved process I will break it down into three different posts. This first post will cover the initial meeting to putting in an offer. The next two posts will cover negotiating the offer through having a Contract for Sale and Purchase and the execution of the contract.
When I work for buyers I start by talking with the buyers and determining what it is the buyers need in a home. Once I have determined those needs I start researching the market. I look at what is on the market now and then I look at sales over the past couple of months. With the needs of the buyers in mind I locate a variety of properties to view.
After I have a list of potential properties I show the list to the buyers who then decide which properties they would like to see.
While I was researching properties I have asked the buyers to meet with a financial representative of their choice to start the financing process. Sometimes the buyers find they cannot afford the original price range and I need to adjust the criteria. It is better to know this prior to viewing properties.
While viewing properties I take copious notes on each property and the buyers’ preferences. I do this for several reasons. The number one reason I do this is so the buyers can focus on each property and I can later remind them of the pros and cons. I also do this to be able to narrow criteria and possibly locate a more suitable property. And I do this so I can give detailed feedback to the listing agent.
Once the buyers have viewed properties and narrowed the selection down I start researching the property history. This information can be extremely beneficial in negotiations. The information can also make one property stand out as the best value. Knowledge is definitely power when making an offer and negotiating a sale.
After the buyers have made a decision to make an offer I write the offer and then I explain the offer to the buyers making sure the buyers understand the parts of the contract and the precise timeline for acceptance, inspections and closing. Once the buyers have signed the offer I present the offer to the seller’s agent and/or the seller.
Let me put value into what a REALTOR® can do for the home buyer. Buying a home is more than locating a house, making an offer and then paying for it. Although that is possible, there are details that should not be overlooked.
As buying a home is a lengthy and involved process I will break it down into three different posts. This first post will cover the initial meeting to putting in an offer. The next two posts will cover negotiating the offer through having a Contract for Sale and Purchase and the execution of the contract.
When I work for buyers I start by talking with the buyers and determining what it is the buyers need in a home. Once I have determined those needs I start researching the market. I look at what is on the market now and then I look at sales over the past couple of months. With the needs of the buyers in mind I locate a variety of properties to view.
After I have a list of potential properties I show the list to the buyers who then decide which properties they would like to see.
While I was researching properties I have asked the buyers to meet with a financial representative of their choice to start the financing process. Sometimes the buyers find they cannot afford the original price range and I need to adjust the criteria. It is better to know this prior to viewing properties.
While viewing properties I take copious notes on each property and the buyers’ preferences. I do this for several reasons. The number one reason I do this is so the buyers can focus on each property and I can later remind them of the pros and cons. I also do this to be able to narrow criteria and possibly locate a more suitable property. And I do this so I can give detailed feedback to the listing agent.
Once the buyers have viewed properties and narrowed the selection down I start researching the property history. This information can be extremely beneficial in negotiations. The information can also make one property stand out as the best value. Knowledge is definitely power when making an offer and negotiating a sale.
After the buyers have made a decision to make an offer I write the offer and then I explain the offer to the buyers making sure the buyers understand the parts of the contract and the precise timeline for acceptance, inspections and closing. Once the buyers have signed the offer I present the offer to the seller’s agent and/or the seller.
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