Purchase Offer

B - Negotiate Contract: Typical situations?

Great offer:

If the opening offer is what you want, it’s best to give pause, not to immediately accept the offer.

Why not? When an opening offer is immediately accepted, buyers often feel that they started too high. This can lead to second thoughts. Panic could cause the buyers to look for ways to get out of the deal. Or they may feel compelled to hammer you with the home inspection. Avoid this potential interpretation by simply delaying your acceptance. This gives the appearance of serious thought and consideration on your part. 

Countering the excellent offer:

This runs the risk that the buyers may walk from your offer since their emotional spring may be wound extremely tight. They could think you’re incredibly greedy for not accepting their really great offer. All buyers want to pay less than full price.

If you feel you have a good reason to come back at or near full price, then consider it. These include things like: it just went on the market, the price was set low to make it attractive, you know that the buyers are highly motivated and that your property really meets their needs, etc.

Reasonable or unreasonable offer:

For the most part, buyers’ offers are what works best for them. Outside of your asking price, they have very little idea as to what terms will be acceptable to you. The buyers may be able to agree to all of the desired changes you provide in your counter offer. So don't blow off their initial offer.

Time limit to respond:

In the offer, the buyers may specify a time limit for your response, often 24 hours. If none is provided, don’t assume you can sit on it and wait for other offers to come. Yes, you may procrastinate, but the buyers have the right to withdraw their offer at any time before you respond, including withdrawing it before the time limit has expired.

Once you have replied with a counter offer that contains any change to the buyers’ most recent offer, this is considered a rejection of their latest offer. Conversely, if the buyers come back with any changes to the counter offer you submit, this is considered a rejection of your offer.    

Only the offer that has not yet been accepted, rejected, or countered is considered to be the current outstanding offer. To avoid confusion, this is the reason why the offer and counteroffers should be done in writing, with any changes made in writing on the same document.  

Pay buyer closing costs:

In some markets it’s very traditional for the seller to pay a portion of the buyers' closing costs. Customary or not, the buyers could be asking for this because they are short of cash. They need everything they have for the down payment.

Instead of countering to eliminate their request, leave it in. But counter their offer with a price that covers these closing costs. Always look at the net you’ll receive, not the bid price.

Cash-strapped buyers will almost always pay a higher price if you’re willing to help with closing costs. They’ll even pay more than the asking price (assuming it’s realistic). However, you need to be confident that your house will appraise to the sale price.

In a buyer’s market, the buyers could simply be trying to get everything they can. If you’ve got a great house, remember: they may want a deal, but primarily, they want your house. 

Unreasonable buyer request:

Some buyers will ask for a credit–such as a new furnace - and inflate the requested amount such that the replacement product is a top-of-the line product.

Counter their dollar request with a lower amount. Even if this is a legitimate request from the buyer (like the inspection revealed the furnace is on its last leg), point out that you could have replaced it with a cheap furnace and it wouldn’t be an issue.

If they want to buy the most expensive high efficiency furnace out there, then in all fairness they should pay the difference since they will be getting the full use out of it.The replacement product (or repair) will be exactly of their choosing and it will be brand new. That’s worth a lot.

Use a middleman:

A benefit for using real estate agents is that in the negotiating stage, the agent is the person delivering the counter offers and shouldering the sticking points. In some situations, having a “middleman” is very helpful.

A FSBO can have this third-party advantage by lining-up an attorney ahead of time. At any point in your negotiation, advise the buyers that you need to run the offer by your attorney, explaining that he or she handles all of your financial dealings.

During or following the negotiating, ask the buyers what lender they’ll use. Advise them that your attorney (the middleman) specified the need for this along with a copy of the purchase contract.  

A by-owner should have a purchase contract ready:

Obtain a blank contract (purchase offer form) from an agent, attorney, or another source. Make several copies and fill in the blanks such as your name(s) and the property address, lot size, etc. However, do not sign these contracts.

Place several of these on a table next to the sales brochures of your home. This could help to get the ball rolling for individuals unsure of their next step. People buy when you make it easy for them.

Financial ability of the buyers:

During the first meeting with buyers, an agent will inquire about their current relationship with a lender. It feels like a personal subject, but it’s all in how you ask.

As a FSBO, sometime before you have reached an agreement, ask the buyers what are the current rates. Then move to which lender they’ve chosen to get their loan. This doesn’t sound abrasive like, “Have you been approved for a loan yet?”  Be sure to obtain the lender’s contact person for your attorney. 

Reaching your bottom line

Don't give a counteroffer that is conveyed like an absolute bottom line, such as, "This is as low as we're going to go." Instead, “This is where we really wanted to be” is much more acceptable and says the same thing. Avoid the "take it or leave it."

Unlawful discrimination:

In case you aren’t aware of Federal laws, they prohibit agents and home sellers from discriminating on the basis of arbitrary reasons. Included in unlawful discrimination are race, color, religion, gender, marital status, national origin, ancestry, familial status (families with children), disability, political affiliation, life-style or sexual orientation.

Some states and local governmental institutions have extended their definition of discrimination even further to protect buyers. You are advised to check with your attorney if you have any concerns here.

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