purchase contracts

A Handy Dandy Counter Offer Tip from Elizabeth Weintraub

counter offer tip

For years, I have employed a counter offer tip that works so well that I just now am getting around to sharing it. I often share tips I have picked up over my 40-some years in real estate because I hope to help others. Due to the nature of Sacramento real estate, we agents are often so busy, we don’t stop to ponder some of the wonderful ideas we come up with. We just do them. Or, maybe I’m just talking about myself. Whether you use this tip yourself or you ask your agent to employ it, I guarantee it will save you from major headaches. Thinking ahead is one of the things I try to do. Because stopping problems before they start is my method of operation.

All it takes is one time that an offer gets screwed up before you might come up with this idea yourself.

See, the deal with a counter offer is it tends to change many of the terms of the purchase offer. Now, let’s say escrow or worse, the mortgage loan officer, forgets to read the counter offer (it happens!) and issues docs based on the original offer. If that happens, everybody has a problem, Houston. Further, the Sacramento appraiser could appraise the home at a lower price. Because appraisers tend to appraise at the sales price. To do otherwise is to turn in a non-conforming appraisal, and nobody wants that.

Naturally, one way to help counter that problem, pardon the pun on my counter offer tip, is to upload all documents to DocuSign in order: counter offer first, followed by purchase contract, addendum and accompanying docs. Then, after the offer is signed, download all of the documents into one PDF file. That way the counter offer can’t get lost and will always be the first document. Of course, to do this, you need to get the counter offer agreed upon first. Before signing the offer.

However, that is not my main counter offer tip. My main tip is to go one step further. In the purchase offer itself, I enter a text box for myself to complete when I sign the offer. The text boxes are positioned next to every term in the purchase contract that has changed in the counter offer. This means if the sales price was changed, for example, there are two spots to change on the first page of the purchase contract that contain the sales price. In both spots, I position a text box. When I sign, I enter verbiage in the text box that reads: see counter offer.

It helps escrow with the allocation of costs, too, especially if who pays what has changed in the counter offer. I insert those boxes throughout so there can be no excuse — no real excuse, anyway, for screwing it up.

I hope you have enjoyed my handy dandy counter offer tip and will find a way to save yourself future heartache.

Elizabeth Weintraub

 

A Handy Dandy Counter Offer Tip from Elizabeth Weintraub

A Good Purchase Offer Does Not Make the Seller Issue a Counter Offer

counter offer

Small mistakes in a purchase offer can require a counter offer.

With almost every new Sacramento listing these days comes a flurry of purchase offers from an assortment of buyer’s agents. Every strong listing agent in Sacramento is witnessing this sort of stuff right now. Some of us, I should add, are fairly detail oriented, and we expect purchase contracts to arrive with all the I’s dotted and the T’s crossed. It should not be surprising, then, when we find mistakes in the purchase contract that it means we will undoubtedly be required to suggest a counter offer to the seller.

A well written contract is a purchase offer the seller can immediately accept. If an agent is submitting an offer in a multiple-offer situation, for example, and that offer is less than list price, a buyer’s agent should not force the seller to issue a counter by making a mistake in the offer. Because a seller will start looking at other things in the offer to object to, perhaps and quite rightly so, starting with the sales price.

Sometimes agents will toss other factors into an offer such as requesting a certain title company when the seller is paying for the title insurance and may have a preference for a different title company. That’s enough to require a counter offer as well. If an agent is from out-of-area and uncertain about what types of expenses are customary fees paid for by the parties in Sacramento, the agent could call the listing agent to ask.

It’s not just listing agents who might gravitate toward easy-to-sign purchase offers; it’s also the sellers themselves. Sellers read entire contracts, believe it or not, and they can note subtle differences among the offers. For example, if the listing in MLS does not offer FHA nor VA financing, the likelihood is it was not a mistake. The seller might prefer only cash or conventional offers. A buyer’s agent’s opinion about that is of no consequence.

I’ve even had agents send this Sacramento Realtor a purchase offer accompanied by an email asking to please send us a counter offer. Not only is that in bad form and could possibly violate a fiduciary relationship with the buyer, but it also suggests the agent has been unable to get the buyer to understand the realities of the marketplace. That’s not exactly the kind of people we want to go into escrow with, although, sometimes it’s just the luck of the draw with buyers and buyer’s agents are stuck with who they get. You can’t always change people, especially the stubborn ones.

My advice for agents is to just write the best offer, check for mistakes, and try not to encourage the seller to issue a counter offer.

A Good Purchase Offer Does Not Make the Seller Issue a Counter Offer

Discounting an Already Discounted Price for a Home

Real Estate Sold Insert over For Sale Sign and HouseThe thing about selling Sacramento real estate is the landscape and climate continually changes from year to year, the market is never the same. The only thing that manages to hold true is the shape-shifting of the challenges. We Sacramento REALTORS always tackle challenges, it’s the name of the game, they just change form.

A few years ago, it was things like the REDC Happy Thanksgiving short sale, in which the negotiator demanded that the seller stop celebrating with his family and start digging into his file cabinet for documents. On Thanksgiving Day. Today, most sales are no longer short sales anymore in Sacramento. They are regular equity sales with traditional sellers. Not only that, but our market has shifted a bit more toward normalcy, even with limited inventory; it’s more balanced.

Buyers seem to present more challenges. It’s like they are tiptoeing around on little mice feet, afraid of their own shadow. They make offers and then vanish. They don’t respond to counter offers and sometimes their agents go with them into that dark hole somewhere. One agent I have emailed, texted, left voice mails, over and over and nothing. Maybe she is in the hospital?

I am also hearing that some buyer’s agents do not present comparable sales to buyer before advising them on writing an offer. They tell the buyer to name a price. So the buyer looks at the list price and then deducts the (inflated) cost of upgrades and improvements the buyer would like to make. The buyer doesn’t realize the price might be a discounted price and instead might try to discount it further. Not to mention, upgrades don’t really factor in.

I’ve heard buyers sob, I would have to pay $50,000 to install a swimming pool so you need to knock 50 grand off the price. I suspect their agent is dying to say, hey, psst, this home doesn’t come with a swimming pool; get over it. But they smile and suggest that the buyer instead tour homes with swimming pools buuuutttt the buyer wants THIS home AND a swimming pool. I don’t envy buyer’s agents. They know a discounted price doesn’t often work.

Some fixer homes, well, they’re not every buyer’s idea of a new home. Buyers generally want to buy a home in move-in condition. This means the homes that need a bit of work can take longer to sell because they don’t appeal to everybody. But just because the days on market are longer than the flipper homes doesn’t mean the price isn’t right. The price might be just right.

 

Discounting an Already Discounted Price for a Home

Paperwork: It is Not Personal, It is My Job, Ack!

Paperwork to submit short sale offerAnybody who works with Sacramento real estate agents knows that a truism for many agents is we all hate to do paperwork. That’s a fact. Further, many agents are not detail oriented. The traits that make an agent excellent at working with other people and a successful negotiator don’t necessarily transfer to the paperwork department. Most people cannot be the life of the party the night before and settle into a cramped chair to prepare a tax return the following day.

The two don’t necessarily mix. Like rap and classics, although Tony Bennett and Lady Gaga would disagree.

Some of us buck the norm; even though we are gregarious, we might carry that weird gene — the one that wants to make sure all of the i’s are dotted and the t’s are crossed and will occasionally give in on ending a sentence in a preposition if it happens to add flavor and comes with. This weird gene somehow blends rather nicely with the social-butterfly gene, that one that embraces people and life and looks for the joy in the world. That’s my personal makeup as a Sacramento real estate agent.

When a buyer’s agent sends me a purchase contract, I want to make sure we are all on the same page. I sometimes ask the seller to send a counter offer, but it’s much cleaner if the paperwork is prepared properly in the first place. Sometimes agents can get very exasperated because they didn’t check a box or they checked the wrong box or they didn’t include the proper addendum or are missing required documentation, and they might misinterpret a request for those documents as extreme personal punishment, which is understandable from their point of view. They hate paperwork. Just because they hold a real estate license does not mean they understand contract law.

It’s a difficult spot, between rock and hard. Does a listing agent prepare a two-page counter offer that could make the buyer’s agent look incompetent or does the agent ask for a revised offer? How does the seller know if the buyer understands the agreed-upon terms if it’s unclear?

Yet, it’s engrained in me that if we’re entering into a legal contract, then it should be a clear understanding and agreement and executed correctly. That behavior probably stems from my years as a Certified Escrow Officer. In a buyer’s market — which is what it seems like we’re transitioning into — sometimes the best solution is to correct the other side’s mistakes for them and just go forward with the transaction. Focusing on the big picture and sweeping up along the way. Just get it done. That’s why we’re hired.

The only time a client will notice this stuff is if we’re sitting in front of a judge in a court of law who asks why we didn’t require a completed purchase contract. And that’s not a place any of us wants to go. I know the difference, and I’ll continue to ensure it’s done correctly in the first place, regardless of what I have to do to achieve it. Paperwork: it’s not personal, it’s my job.

Paperwork: It is Not Personal, It is My Job, Ack!

Buying a Home in Sacramento in AS IS Condition

Home-for-sale-sacramentoAS IS — two simple words that seem to cause so much confusion in Sacramento real estate. I can say AS IS over and over until the cows come home and it doesn’t seem to sink in. My sellers can ask me to draw a counter offer or an addendum to a purchase offer that clearly states there are: no repairs, no credits, no renegotiations, as the home is sold in its AS IS condition, and buyers can sign that document, yet soon as their pen leaves the page, their memory of this contractual agreement vanishes. Did they dip a feather quill into lemon juice? Have a lobotomy?

My heart goes out to buyer’s agents who have to deal with the AS IS Condition issue day-in and day-out. They can explain that a seller will not give them a credit nor make any repairs but the buyers will still push. I realize that sometimes it’s not the buyers who are the problem — it can be their relatives or their coworkers or their drinking buddies: Hey, when I bought my house, the seller painted the entire interior, bought me all new appliances and threw in a Mercedes. The implication being that the buyer is a wuss or a nitwit. The self-important braggers neglect to point out this was 20 years ago or in a different city but the point is it is not this transaction. All transactions are different.

When I receive an email from an agent with a single sentence attempting to defy the AS IS, I know what happened. The sentence might say, my buyer is requesting a $3,000 credit to closing costs. Or, my buyer would like to know if the seller will split the cost of a new roof, which might have been a talking point during negotiations. So, the agent feels a little silly having to ask that question because the agent had already discussed it with the listing agent and the buyer prior to the offer. I know the agent pointed out the roof and said it was the buyer’s responsibility. And I know the buyer understood. And we both know that I know.

Still, the buyer’s agent must ask the question if the buyer poses it.

If the buyer’s agent thinks the buyer has half a chance of obtaining any of these requests — which the buyer had made after the buyer promised not to make them — the buyer’s agent will try to build a case for the buyer. But when there is no case presented, just the request, I know the poor agent is feeling the pain.

Buyers often don’t stop to consider that they might be irritating the seller with these types of requests. Especially when they tripped over the sidewalk walking up to the front door. They should not come back later after promising not to ask for repairs and demand that the seller replace the sidewalk. It makes the buyer look like an idiot (or conniving), none of which sets well with the seller. Any special requests the buyer might need down the road, such as an extension to close or any gifts such as refrigerators or washers and dryers are unlikely to be granted when a buyer attempts to break a promise.

If a buyer doesn’t want to handle the consequences of purchasing a home in its AS IS condition, then maybe the buyer shouldn’t try to buy a home under those conditions in a hot Sacramento seller’s market. It’s all a part of home ownership anyway. Things break, malfunction and stuff need to be updated, repaired and maintained — all during the life of a home buyer. It’s scary for a buyer starting out, and that’s where the buyer’s agent can be an invaluable tool.

Buying a Home in Sacramento in AS IS Condition

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