In this chapter:

> Formulating an offer> Negotiation know-how> Working toward a purchase contract> Presenting offer in person> When you cannot personally present the offer> Offer and counteroffer procedures

6. Offer through Accepted Contract

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FORMULATING AN OFFER

• When your buyer clients have found right property, next step is formulating an offer that will lead to accepted purchase contract

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FORMULATING AN OFFER

Factors include:• Price of similar

properties• Property condition• Length of time on

the market

• Supply and demand• Seller’s motivation• Terms• Return on

investment

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NEGOTIATION KNOW-HOW

1. Identify your buyer client’s priorities

2. Assess strength of negotiating position

3. Plan a negotiation strategy 4. Assess big picture5. Write the offer6. Follow through

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Identify the Buyer’s Priorities

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• Price?• Closing date?• Closing costs?• Seller’s personal property included

in transaction?

Assess Strength of Negotiating Position

• General market conditions

• Property selection• Buyer’s financial strength• Seller’s situation

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Strategies for Buyer’s Markets

• Keep up-to-date on price adjustments

• Shop around for good mortgage terms

• Request contingencies or extras

• Ask seller to assume some of closing costs or fees

• Shorten time period for seller’s acceptance

• All cash or pre-approved mortgage commitment

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Strategies for Seller’s Markets

• Obtain mortgage commitment pre-approval• Offer list price or more• Make first offer the best offer• Keep contingencies to minimum• Pay cash for all or majority of purchase

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Plan a Negotiation Strategy

• Establish overall strategy starting with initial offering price and terms, and include acceptable price and terms as ultimate goal

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Plan a Negotiation Strategy

• Remember, key to successful negotiation is ability to see and understand your buyer client’s and other party’s positions

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Assess the Big Picture

• Step back• Provide client with any information that

may be helpful for making informed decisions as you progress together through negotiating process

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Write the Offer

• Property address• Sales price and

terms• Seller’s promise to

provide clear title• Date for closing• Earnest money• Prorations• Who will pay for

title insurance, etc.

• Type of deed• Federal- and state-

required provisions• Final walkthrough

inspection prior to closing

• Length of time for which the offer is valid

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Follow Through

• Be ready to implement rest of your negotiating strategy when seller makes counteroffer.

• Keep negotiating process at professional level.

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ADDITIONAL CONSIDERATIONS

• Ensure your buyer is fully informed• Any oral promises are not enforceable• If seller accepts offer, it becomes binding

contract• Once offer is accepted and becomes contract,

attempting to walk away is serious misstep

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WORKING TOWARD AN ACCEPTED CONTRACT

• At this stage, role of buyer’s representative is to provide information and advice, not to determine what is “best” for client

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PRESENTING THE OFFER IN PERSON

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• In many markets, it is customary for buyer’s representative to fax offers

• Distinct advantages to presenting offer in person

• See Figure 6.1

PRESENTING THE OFFER IN PERSON

• When you submit buyer’s offer by fax, you’re:• Entrusting another agent to present

your client’s offer to the decision maker• Possibly exposing your client’s offer to

all other agents in that office

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PRESENTING THE OFFER IN PERSON

• Benefits to presenting offer in person:• You will know more about seller’s situation

and concerns• You will be confident that your buyer’s offer

and terms were described in a manner that hopefully favors your buyer

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PRESENTING THE OFFER IN PERSON

• Benefits to presenting offer in person:• You handled negotiation process in

professional manner

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PRESENTING THE OFFER IN PERSON

• Tips for successful in-person presentation:• Create a friendly

atmosphere• Explain the offer

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Timely Presentation of Offers

• Timely submission of buyer’s offer is your duty to buyer

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OFFER AND COUNTEROFFER PROCEDURES

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• Per NAR Code of Ethics, all offers and counteroffers must be presented to the clients up to closing or until such time that the clients, in writing, no longer want to entertain offers

WHEN YOU CANNOT PERSONALLY PRESENT THE OFFER

• Verify listing agent is available to receive offer before faxing it

• Consider personally presenting buyer’s offer to listing agent

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WHEN YOU CANNOT PERSONALLY PRESENT THE OFFER

• Include cover letter written by buyer• Request that seller counter or reject offer in

writing

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HANDLING MULTIPLE OFFERS

• Buyer or buyer’s representative must ask for whether there are multiple offers and seller must consent to divulging it before seller’s representative can share this information

• NAR white paper is Figure 6.2.

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NEGOTIATION—CORE COMPETENCY FOR BUYER’S REPRESENTATIVES

• Negotiation is core competency.• Seek advanced training on this topic.• For a look at additional negotiation tips,

see Figure 6.3.

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