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In today’s hyper-competitive market, listing agents are sorting through offers to find the ones that are written well and demonstrate the buyer agent’s knowledge and expertise.
With multiple offers still ruling the day, it is not uncommon to hear a buyer’s agent say, “The best offer is all-cash with no contingencies.” “Au contraire,” stated a high-volume listing agent I talked to recently. “We don’t automatically accept the ‘highest’ or ‘all-cash’ offer,” he informed me.
“In fact, they are frequently the most poorly written — the buyer’s agents either do not fill in key information, fail to include required documentation and, in some cases, fail to factor in their buyer’s limitations. To be honest,” he added, “We typically use badly written offers to leverage better offers from more competent agents.”
Concluding, he said, “If an agent does not know how to write an effective offer, how can we trust that they know enough to get us safely through to the close?”
The goal is to write an offer that does not need to be countered or corrected.
Here are my seven top things to pay attention to when writing offers:
Read the instructions
Whether written on the MLS or included in a disclosure package, many listings have specific instructions designed to pave the way for effective offers. Our team not only puts clear directions in the Agent Comments section of the MLS, but we also include Instructions for Writing in the disclosure package.
We include basic requirements such as pre-approval letters, proof of funds for the down payment and other critical items we want to see included in any offers. While designed to help buyer agents succeed, they come with one caveat: agents need to read them. I am astonished at how many agents seem to lack fundamental reading skills.
Contact the listing agent
While this should be obvious, we frequently get offers that come sailing in out of the blue with no warning or previous contact with the buyer’s agent. More often than not, these offers could be categorized as “Hail Mary” efforts that an agent is sending in per their buyer’s wishes.
Effective offers begin with a solid understanding of the seller’s needs and wishes and, typically, the only way to get this information is to talk directly with the listing agent.
- What does the seller actually want or need?
- When do they want to close?
- Do they need rentback?
- Is this an “As-Is” sale or are they open to doing some repairs?
- What contingency time periods are they hoping to see?
Seasoned agents have a comprehensive list of questions they cycle through to make sure they cover all potential bases.
In addition to building rapport, a lot of pre-negotiation can happen during these calls that can pave the way to an accepted contract. You may also discover that they have already received offers higher than your buyer’s maximums, which may save you the need to write an offer that will effectively be dead on arrival.
Fill in all the blanks
Nothing is more frustrating than offers that have key information missing or data written in the wrong area. We do two things to help our team members write the best offers possible.
First, we set up templates that preload critical information that must be on every offer. Second, we encourage everyone to use the tab key when writing offers so they must stop on every blank. This extra step helps ensure they do not leave key sections blank.
Lastly, our agents check the financial section to ensure that the numbers are in the correct areas. I have seen more than one offer where the buyer’s agent put the loan amount on the line intended for the good faith deposit.
Follow area practices and protocols
In our region, we have a multitude of MLSs and regions that all have different rules. As an example, in our county, the buyer pays for both title insurance and escrow fees. Five miles down the road in the next county, the seller pays, while other counties nearby share costs 50/50.
We frequently get offers including city tax for cities that have no tax and offers that fail to include it for cities that do. In either case, we have to generate an addendum or counter-offer to make the correction. Currently, our sellers expect a good faith deposit of 3 percent of the purchase price which, on a $1,000,000 home amounts to $30,000. Even with this expectation, offers come rolling in with the earnest money at $5,000 or lower.
Bottom line, take the time to fully understand all the practices and protocols of the area in which you are writing the offer and then follow them to the letter.
Shorten time periods as much as possible
Talk to the buyer’s lender to see if they can shorten or remove the loan or appraisal contingencies. If removing the appraisal contingency, make sure you have run scenarios to ensure they will have enough cash to close in the event the appraisal comes in low.
If comprehensive disclosure packages and reputable inspection reports have been provided upfront, it can be possible to remove the inspection contingency. If a seller wants to be out in a hurry, find out how fast your lender can close or partner with programs such as Homeward that will allow you to buy with cash and close in as short as three days (contingent on local parameters).
Understand lending rules
A common mistake we see is for inspections to be included in an offer even though the seller has made it very clear they will not be making any repairs. While purchase agreements differ from state to state, most include the option for buyers to perform inspections during the discovery phase of the contract even if they are not specifically written in.
As an example, if a purchase agreement has a termite inspection written in, the lender has a right to ask for a copy of the report and may insist that repairs be done prior to the close of escrow even though the seller has stated it will be an “As-Is” sale.
The opposite can be true of government-backed programs such as VA loans, which typically require a wood-destroying pest clearance which needs to be written into the contract. Condos need to be approved by HUD to qualify for FHA loans. In our area, we do not see a lot of co-ops, which also have specific lending rules. Make sure you understand the requirements for the type of loan your buyer is using and write offers accordingly.
Include a note from the buyer
While classic buyer “love letters” can set the stage for fair housing violations and are currently under scrutiny, a simple note from the buyers can help the sellers understand why they are interested in purchasing their specific home and improve the odds of success. In order to prevent potential fair-housing issues, these notes should not include any pictures or personal information, but rather focus only on attributes of the home that have special significance to the buyer(s).
To reiterate, the goal is to write offers that are well-conceived, complete and can be accepted without a counter, corrective addendum or the need for a rewrite. This is often what separates the skilled agents from the rest.
The better written the offer, the higher the chances of success, even if the numbers and terms are not necessarily the highest or best.
Carl Medford is CEO of The Medford Team.
