Contract for Your Home
DRAWING THE CONTRACT
Approaches to Negotiation
Every Buyer and Seller has different levels of risk-tolerance. We can discuss these approaches to writing an offer when the appropriate time comes.
Extreme or Fair Initial Offers:
Extreme offers generate extreme responses and often create a difficult environment for future negotiations. Fair initial offers far more often create a climate of trust between the parties and lead to mutually satisfactory transactions. The worst thing you can do is deliver an offer that offends a Seller or insults his/her home and leads them to feel that you are not a person they are willing to work with in the future.
Offers Generate Responses:
When creating an offer, ask yourself this question. “If I was the Seller of this property and I received this offer, how would I respond to it?” If the answer is not the one you like, then alter the offer until you feel that your offer will be well received.
Time Limits:
Be careful about placing time limits on your offers. We will discuss whether or not placing a time limit on your offer would fit in your circumstances.
The Negotiation Process
Submitting the Initial Offer:
- Presentation: Most offers today are delivered to the Listing Agent for presentation. It is rare that I will have the opportunity to present your offer to the Seller in person.
- Personal Letter: You may want to consider including a personal letter to the Seller with your offer. We will discuss this strategy if it seems appropriate.
- Questions from the Seller or Listing Agent: Be prepared to hear from me prior to any acceptance or counter-offer with questions from the Seller or Listing Agent. You must be easily available (sometimes by both phone and fax) to answer them in order to facilitate an agreement.
Possible Outcomes:
- Acceptance: Your offer will be signed as written.
- Counter Offer: Your terms will need to be modified in order for them to be acceptable to the Seller.
- Rejection: The Seller refuses to enter into negotiations with you because of a perceived inability to reach agreement. The offer is returned marked “Rejected”.
- No Response: The Seller simply chooses not to respond but your offer will remain alive until you withdraw it.
Response to Counter Offers:
Your response to a counter offer should be handled as quickly as possible in order to avoid a change of heart on behalf of the seller.
RATIFIED CONTRACTS & MULTIPLE OFFERS
Ratified Contracts
You will have a ratified enforceable contract when:
- All parties have agreed, in writing, to all the terms without addition or amendment; and
- A copy of the fully executed contract is delivered back to the other party.
Negotiating When There Are Multiple Offers
- Awareness: You may or may not know if you are competing against other offers because the obligation of the Listing Agent to inform buyers of the existence of other offers is up to the Seller.
- Acceptance: Seller will accept or counter only one offer, in most cases.
- Best and Final: It is possible that the Seller will counter none of them and send them all back out the Buyer’s “best and final offer”.
Three issues for your consideration:
Maximize Seller’s Net Proceeds by:
- Increasing your offering price
- Accepting all costs
Occupy at the Sellers convenience:
- Which might necessitate a quick settlement and
- A Seller rent back
Reduce Risk of Buyer’s Non-performance by:
- Increasing deposit
- Demonstrating that financing is solid
- Removal of all contingencies, if possible
