Terms: Offers (and Counteroffers)
This is where you are going to see all of your hard work pay off. The
most important thing to remember when handling offers and counteroffers
is that buyers have expressed a sincere interest in purchasing your
property. 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 sale price is very important, but so is the value the
buyer is getting from your sale of property. For instance, if you
thought you would move your new washer and dryer to your next home - but you're
dealing with first-time buyers that can't afford buying a washer
and dryer after closing - you may be able to seal the deal by including the
washer and dryer. That's terms and price.
Offers
An offer is basically a written contract, one that a buyer will present to you
describing the terms and price for which they wish to pay for your
property. Be prepared - the price will most likely be below what you advertised
and don't panic if it's below what you need.
To ease this process, you may want to get a template of an offer for purchasing
property from your attorney or use the contract in
How to Sell Your Home Without a Broker.
If you are buying a home yourself, you could
always use that one.
Whatever the case may be, consider creating an offer contract
tailored for your property and give it to prospective buyers
when they visit and tour your property. This will indicate to the buyer
that you are serious about selling, as well as helping them with the
process.
Your contract should be as powerfully worded as the contracts in California, containing
a phrase at the top such as the following:
This is more than a receipt for money. It is intended to be a legally binding contract.
Read it carefully.
In addition, your contract should at least 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. Some contracts
may be submitted with a deadline for your approval or counteroffer, after which the offer
will be null and void. Others, likely most of them, will state that they are revokable
upon written request of the buyer anytime prior to you accepting the offer.
You should request that your buyers submit an offer to you in writing, which
details all issues important to them. In addition, you should have your
buyers submit the offer to you with a check for "earnest money," preferably one made out to an
escrow officer. The check is a sign of good faith, and is typically for a
nominal amount of money, perhaps a down payment or as little as $100.
If you have selected an escrow officer to
work with, then ask the buyer to write the check out to that officer. Don't be
offended if the buyer would prefer to use an escrow officer that they select -
remember this is an impartial, third party person, who is legally bound to be
a neutral party. If you haven't added
an escrow officer to your expert network,
the buyer will most likely get one rather than writing the check out to you.
Prior to meeting the buyers to negotiate an offer, you'll want to have
a chance to review an offer prior to meeting. However, keep in mind, this may not always be feasible.
Otherwise, ask for a signed offer at the meeting. If the buyers refuse, don't waste your time.
Serious buyers will be ready to negotiate signed offers.
Negotiation
Ok, here we go - this is easy. Remember, your buyers want to purchase your
property, they just want to get the best value they can. If you relax, stay
calm and focused, with your
profitability limits in mind, then you will
do just fine and things will go smoothly. You both have the same goal - fair market
value.
You'll want to schedule a meeting with the buyers to negotiate the offer.
Try to have the meeting at a time when you will be well rested and can conduct the
meeting in a businesslike manner. Meeting around a kitchen table
is typical and less threatening than a law firm, but if it's not feasible,
a neutral meeting place will do just fine. Discuss meeting options with your
attorney and escrow officer.
Negotiations can be civil and straight forward, but be prepared
to deal with a buyer that might want to unnerve you to try to get a better deal. These
things usually occur when a third party, such as a realtor, is coaching the buyer. Some buyers
may come late to meetings or point out all the problems with your property.
The best way to handle the meeting is to simply review the offer with the buyer. A good place to
start is by discussing the contingencies. They may also be selling their property and need
the proceeds for the down payment. Walk through each term that
is identified in the offer - ask questions so you understand why it was included
in the offer. If the buyers have offered a lower price, discuss how they determined the offering price, perhaps ask
what comparables they used.
Negotiations always work best when you use sound
logic to explain requests related to the offer and when both parties are willing
to compromise. Upon completion of the meeting, thank the buyers and inform them that
you would like a day or two to consider their offer. Be sure to give them a date by which you
will notify them. Three days is typical.
Counteroffers
If you decide that you like the offer you received from the buyer, then by all means
go ahead and accept it.
For the rest of us, there will be counteroffers. Think of a counteroffer as - I liked
your offer, but I would like it a whole lot better if it included...
This is exactly what you're doing with a counteroffer. You are saying that you will accept
the offer if the price were $190,000 rather than $180,000 and you didn't have to
leave the curtains your mom made for the windows. You want to spell everything out that
was omitted from the offer. If there was no mention of the furniture, don't assume
that you are taking it with you. Write it in the counteroffer!
Now, you don't want to be itemizing all your personal property, so you would be better off
stating something like "the following items of personal property are included," listing
the specific items you will sell with the property, such as appliances. If
the offer is well done, you shouldn't have to worry about this.
You will want to get a counteroffer template from your attorney, it may be as simple as a
letter, or you may want to use the contract from
How to Sell Your Home Without a Broker.
Make sure the counteroffer includes at least 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
- your changes or amendments to the terms of the offer
You may want to include a statement that allows you to revoke the counteroffer, in writing, anytime
prior to the buyers acceptance. Also, include a clause about being able to
accept other offers.
That's it! Basically, you may go through several iterations of this, but this is how
it's conducted.
Good luck, hopefully you will soon accept that offer -->
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