Offers (and Counteroffers)
Ok, it's now time to put together an offer. Now that you've found the property,
visited it for a tour, researched the neighborhood and reviewed the comparables, it's
now time to make an offer.
You're basically in the home stretch now. It's just a question
of whether or not you can both come to
an agreement regarding the terms and price of the sale.
Terms and price - not just price! You should be aware that typically,
when buyers and sellers simply worry about the final sale price, the deal
fails.
Yes, the final purchase price is very important, but so is what
you're getting from the purchase of the property. For instance, if you
thought you are getting the washer and dryer with the property, make
sure it's included with the terms of the offer - terms and price.
Offers
An offer is basically a written contract, one which you will present to the seller
describing the terms and price for which you wish to pay for the
property. Be sure to list out any personal property you would like to have included with
the property as terms of the offer, such as curtain rods, washer and dryer, refrigerator, or
perhaps the nice slate-top pool table.
To ease this process, you may want to get a template of an offer for purchasing
property, from your attorney. Create an offer contract from the template that is
tailored for the property. Deliver the offer to the seller personally or have it mailed
via United States Postal Service (send certified with return receipt), UPS, or FedEx.
Your offer should contain the following items:
- date the offer is made
- name of the buyer(s) - person(s) making the offer
- name of the seller(s) - person(s) to whom the offer is made
- address of the property for sale, for which the offer is made
- offered purchase price
- terms of the offer - such as what will be included with the sale of the property,
and/or contingencies, such as securing a mortgage and consideration of
home inspection results
These are just a few of the items that may appear on your offer contract. You may want to
include a deadline for seller approval or counteroffer, after which the offer
will be null and void. Also, state that the offer is revokable
upon written request by you at anytime prior to the seller accepting the offer.
You will want to include a check for a nominal amount as a sign of good faith. The check
should be made out to the escrow officer you or the seller have selected. If the seller
has not found an escrow officer, insist on using the one in your
network of experts, and
never make a check out to a seller directly. The check can be for as little as $100, and
can be later used towards your closing costs.
Negotiation
Ok, here we go - this is easy. Remember, the sellers want to sell the
property. They just want to get the most for it as they possibly can. If you relax, stay
calm and focused, and understand your
research, then you will
do just fine and things will go smoothly. You both have the same goal - fair market
value.
You will want to meet the sellers to discuss the offer. The meeting will
go much smoother if you give the sellers a chance to review the offer prior to meeting.
But keep in mind, this may not always be feasible. Have the meeting at a time
when you will be well rested and can conduct the meeting in a businesslike
manner.
Consider having the meeting at the seller's property. This is typical and would be less
threatening than a law firm. But if that's not feasible,
a neutral meeting place will also do just fine. Discuss your meeting options with your
attorney and escrow officer.
Upon meeting, if you haven't presented a written offer yet, bring the offer and give it to the
seller at the meeting. Negotiations can be civil and straight forward. Don't wast time and
energy trying to unnerve a seller. This typically does not work and the result could be disastrous.
The best way to handle the meeting is to simply review the offer with the seller. Start
by discussing the contingencies. They may also be buying a property and need
the proceeds for a down payment. Next you will want to walk through each term that
is identified in the offer. Be sure to clearly explain each term so that there is no
confusion and be prepared to answer questions from the seller. Finally, discuss how you
determined the offering price. If there is a big discrepancy, ask the seller how they determined
their asking price and what data they used.
Once you have completed the meeting, thank the seller for having you and ask them when you can
expect a response from them regarding the offer. Three days is typical. Negotiations work best when you use sound
logic to explain your requests related to the offer and when both parties are willing
to compromise.
Counteroffers
It is highly unlikely that a seller is going to instantly want to accept your offer,
seeing that you most likely offered less than the asking price. So, you should
expect a counteroffer from the seller - if of course they are serious about selling their
property.
Most likely you will receive a counteroffer from the seller. Consider this a sign that
they want to play ball with you - they just didn't care for your first
pitch. Any counteroffer you receive should be in writing. Simply receiving one over
the phone is not acceptable. If this is the case, request that they put together
a written counteroffer for you to review. You can either pick it up or have them
deliver it to you.
If you decide that you like the counteroffer you received from the seller, then, by all means,
go ahead and accept it and put together a
purchase agreement.
The counter offer should include the following:
- date the counteroffer is made
- name of the buyer(s) - person(s) receiving the counteroffer
- name of the seller(s) - person(s) making the counteroffer
- address of the property for sale, for which the counteroffer is made
- counteroffered purchase price
- the seller's changes or amendments to the terms of the offer
There will probably be a statement allowing the seller to revoke the counteroffer, in writing, anytime
prior to your acceptance, as well as a clause enabling the seller to accept other offers. If you
are still not satisfied, you can of course counteroffer...
That's it! Basically, you may go through several iterations of this, but this is how
it's conducted.
You will soon have an offer accepted, then,
purchase agreements -->
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