offer acceptance

What Does a Sacramento REALTOR Do With a Lowball Offer?

offer rejection 300x200Probably one of the worst things a Sacramento REALTOR can do is make a judgment call on an offer, even about a lowball offer, when presenting an offer to a seller. That’s because the listing agent is not the seller, and we don’t ever really know what a seller will do. To presume we do is sorta stupid. The one exception to this, though, is when the transaction is listed as a short sale, and the bank has already authorized a sales price, which is probably not subject to negotiations and conforms to a formula, like FHA Short Sales.

There are agents in the Bay Area, for example, who often send lowball offers without any warning or notice. Most of the lowball offers I receive like this are faxed to my office, even though all of my listings contain explicit directions on how to submit an offer, and faxing the offer to the office is not one of those options. They are often missing crucial elements of the offer, especially when it’s a short sale. I try to overlook those mistakes because I realize when buyer’s agents are crazy-busy throwing offers at the wall to see what sticks, they don’t always have the time nor the patience to thoroughly read each MLS listing.

It’s possible these same agents could also be the type to double-end their own transactions as the principal buyer. Yowza. They probably think they are clever, living life at its fullest and not on the edge. I try not to be judgmental about them, and I just pass along their offers.

When I send these offers that don’t stand in chance in hell of acceptance to the seller, it is a waste of time for everybody, but I am required by law to do it. If a buyer’s agent sent me an offer written on a roll of toilet paper, I’d have to send it, and many of these lowballs would be better off scribbled on a roll of toilet paper than handwritten and faxed. But I also apologize to the seller for a) sending them a worthless offer that the agent should have known better than to send, and b) wasting my seller’s time. I explain that I am legally required to send the lowball offer but they are not required to respond and, in fact, they should ignore it.

It’s somewhat more disturbing when lowball offers arrive on pending listings. I’m not sure what the thought process is, maybe that the deal will blow up and the seller will be so despondent or desperate that she will grab any offer that floats through email. But the fact is if a transaction should blow up, I simply sell it again, generally at a higher price. I just closed a few days ago on a waterfront home in Elk Grove, which I sold 4 times. The final sale was the highest ever, and such a good offer that we rescinded a counter about to be accepted, grabbed the new offer and ran with it all the way to the closing table.

This is what Sacramento real estate is about.

I received 3 offers recently on two preapproved short sales, varying between $50,000 and $100,000 LESS than the approved and pending price. That was unusual. Enough so that I called the out-of-area agent to ask why was he creating all of this unnecessary work for me, and bothering the seller with these silly-ass offers that are obviously going nowhere. I considered not calling him but due to the volume of business I do, I had a sneaky feeling if I didn’t nip this in the bud, it would continue on my other listings. My time is valuable.

The agent’s response was he has to do what the client tells him to do, just like I would do. No, see, the difference is I don’t work with idiots.

3 Tips for Submitting a Purchase Offer to Buy a Home in Sacramento

Purchase OfferApart from the fact that this Sacramento real estate agent could probably write a book about how to submit a purchase offer, I don’t have that much time in my schedule this morning and nobody has offered to pay me for it. Yet, I would like to address 3 tips that would help a buyer’s agent to get an offer accepted. These are things that if any agent thought about it for a few minutes or looked at it from the viewpoint of a listing agent, they would automatically do. But many remarkable ideas are simple.

Before sending an offer, please review these simple tips:

  1. Send one PDF
  2. Don’t send disclosures
  3. Email in low resolution

There is no reason to send a bunch of different files. Let’s set aside the fact that by sending more than one PDF, a buyer’s agent is taking the chance that a PDF file might not end up as an attachment by oversight or a seller might not open it, and look at what a hassle it is from a receiving viewpoint. First, I have to set up a folder to accept all of the PDFs I receive from a buyer’s agent. I can’t just save the offer to my desktop nor dump the offer along with its supporting documents into the property folder because they will get lost and separated. All separate documents require their own stinkin’ folder. I hate to think what the seller does with the documents.

Second, then each of those PDFs have to be opened to be read. Some require separate applications to open. For example, if a preapproval letter arrives in a Word format, and I don’t happen to have Word open — because it’s not a program I use very often — then I need to sit and wait for Word to open. It’s annoying.

Now, don’t get me wrong, I am very excited to receive an offer for my seller. That is my job: to get a purchase offer. But let’s say it’s a seller’s market, like the market is today in Sacramento, and the seller might receive 5 offers or more. And the offer that arrives in piecemeal is just like most of the other offers. A seller might open only the purchase offer and none of the supporting documents just to note the price and forget about whatever else was sent.

Think of the end user, the seller. Are you making it easy for the seller to read your offer and accept your purchase offer? Are you sending documents that the seller doesn’t need such as disclosures and market condition notices?

To go into contract, sellers in Sacramento need the purchase contract, the agency disclosure, the earnest money deposit copy and the prepaproval letter (or POF). That’s it. No other documents or disclosures.

One last tip, make sure your PDF is not so large that it can’t be downloaded. Some buyer’s agents accept one-page scans returned as JPGs from the buyer. Those JPGs can be such a high resolution that the file becomes too big to email. Downsize it. Look at the MBs before hitting send in your email. If it exceed 5 MBs, that listing agent and seller might not be able to even open your attachment.

Can you imagine losing a home because the seller couldn’t open your offer?


When to Accept a Sacramento Purchase Offer

Real Estate Sold Insert over For Sale Sign and HouseSellers today get very excited when they receive an offer but not excited enough to sign a full-price offer for their home in the Sacramento area. Wha? Yes, sellers do not want to take the first offer that comes in. They are savvy and know multiple offers will arrive if they just wait. The problem is a seller can’t wait very long unless her agent specifically states an offer review date in the MLS comments. Some sellers think they can wait as long as they want to accept a purchase offer, but they cannot.

Most residential purchase contracts in California contain a 72-hour clause for offer acceptance. This is by default. It means a seller has 72 hours to respond or the offer will expire. If a seller rejects a full-price offer that meets all requirements, it can be a problem. It can be a problem for the agent, and it can be a problem for the seller.

Agents are required per MLS to state in the comments that the seller has rejected a full-price offer, if the seller has rejected a full-price offer. An alternative is to increase the sales price in MLS to the price a seller will accept. Moreover, once a willing buyer has submitted a full-price offer meeting all the terms and conditions of the listing to a seller, the court typically says the brokerage has earned a commission. It’s not the listing brokerage that usually raises a fuss over this, it’s the selling brokerage, the company that represents the buyer.

Not to mention, just overall, a delay in response to purchase offers can super irritate a buyer to the point that a buyer might withdraw her offer if the seller keeps her waiting too long. While it may be tempting for a seller to wait to see how many other offers a seller will receive, a seller could have a legal obligation to quickly respond to a purchase offer.

Why Did the Seller Reject Your Offer to Buy a Home?

reject your offerIf you’re looking for the secret about why the seller might reject your offer, you might be sorely disappointed in my answer. That’s because in just about every situation you can name in the Sacramento real estate market, it is the seller who chooses the buyer, not the agent. As such, the seller can have a bazillion different reasons why the seller prefers one offer over another. Yes, at this point you’re probably thinking: what about the listing agent’s input? Doesn’t the listing agent influence a seller’s decision? I believe that it is the listing agent’s job to guide, not to decide.

One way a purchase offer can gain traction is to be written correctly. This may sound overly simplified and you might wonder how anybody could write an offer incorrectly, but that’s obviously because you are not a listing agent in the greater Sacramento region. If you were a listing agent, you would know how offers can be written incorrectly.

Write the offer without mistakes is the number one rule.

It’s difficult to write a purchase contract without any mistakes. It means an agent needs to re-read MLS to make sure all of the directions were followed. Sometimes, listing agents insert tips or requirements into MLS, so it’s a good idea to review the confidential agent remarks and look for attachments in MLS. Veteran agents know that we live in strange times. It also means checking the correct boxes, making certain the buyer’s name is spelled correctly and matches the preapproval letter, double-checking the math and terms, using the right property address, including required documents, and so forth. Dot I’s. Cross T’s. Don’t give the seller a reason to reject your offer.

I can’t tell you how many offers the Elizabeth Weintraub Team gets accepted in Sacramento simply because the offer is written correctly. No other reason. It’s not our ranking or the fact that other agents respect us, it’s that our offers generally do not contain any mistakes. Because what is there for a seller to base a decision upon apart from price / net proceeds? In a short sale situation, for example, the seller isn’t even receiving any of the profits so price, while important, is really not a primary consideration. Commitment to the transaction is paramount, as is the ability to close escrow. In a short sale, you’ve gotta be willing to wait for short sale approval and be able to close without delays or hiccups.

A while back an agent changed the amount of the earnest money deposit in a purchase contract that I received. The amount was cut in half. It was simply crossed out and rewritten, without an initial. I did not know whether the agent changed the earnest money deposit or if the buyer had altered the contract, but in any case it was enough for me to question the buyer’s agent. I felt this was an issue the seller might want to know and she may raise the question herself. Why did the buyer lower the amount of the earnest money deposit on this short sale?

The buyer’s agent explained that the buyer did not want her money tied up for a period of possibly 3 months. Probably because she would be losing out on that whopping .5% interest rate paid by local banks — that 60 cents paid over 90 days.

The seller was looking for a committed buyer. A buyer who really wanted the home. A buyer who was willing for 3 months. This is a seller’s market in Sacramento. Many sellers receive multiple offers. Sometimes, a seller can receive a dozen purchase offers or more within 24 hours. In a short sale, many sellers are not looking for a reason to accept a purchase contract — they are looking for a reason to reject it so they can focus on the few offers that fit the sellers’ criteria. Try not to give the seller any reason to reject your offer.

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