In order to purchase real estate at the best possible price certain fundamentals should be followed. I will outline those fundamentals in this article, however, not all of these recommendations work all of the time.These ideas have been developed over my 24 year career in real estate and some have been learned from those who have in excess of 4 decades of real estate brokerage. They work !
There are exceptions to every thing outlined here, however, most of these ideas are of value most of the time. Nothing works all of the time.
1. If at all possible have your offer prepared on a word processor or at the very least have it typed. Handwritten offers are at times difficult to read and may easily be misconstrued or misunderstood. Clear, concise purchase agreements prepared on a word processor convey a business like impression and are definitely more well received by the listing broker. He or she may have to convey your offer via fax and it will be vastly easier to read and far more easily understood.
2. If at all possible, insist that your agreement to purchase be delivered to the listing broker in the original, not by fax. It will be more easily read, easy to convey and all parties will find it much easier to respond to. Minor changes can be entered on the original, initialed by appropriate parties and again the agreement should be clear to all parties. When possible avoid counter offer forms as they add to the number of documents in a transaction which must be monitored,
3. As a general rule make your offer binding and irrevocable for no more than 24 hours. I have found that on occasion the public feels that more time should be given, in order to make the seller not feel rushed. Bad idea ! The more time a seller has the more time he will take in responding. As an aside, please understand that if you allow a week for a response on your offer, the seller may receive and consider other offers and in fact would be free to accept one of those offers â€"even though your offer was submitted first. Remember that there is no order of priority on offers and that all offers written, all, must be submitted to the seller for his or her consideration. And if you allow several days, a week or a month, in the interim that seller may be entertaining other offers and you may lose the property !
4. Avoid entering language in the purchase agreement which is unnecessary, repetitious, ambiguous, subjective - such as repairs are to be purchaser’s satisfaction- instead of repairs are to be done in a workmanlike manner. If the number of days for inspections, loan application or any other reference to number of days is changed from the those which are in the purchase agreement do not permit the substitution of “business†days or “working days†for calendar days.
Simply change the number of calendar days from 10 days to 14 days or whatever is desired. The point here is that everyone counts calendar days precisely the same way but business days and working days have different interpretations with various agents, brokers and the public Calendar days are the same to all.
5. There is no place in a purchase agreement for “hip†language such as “done†when entered where the number of days to make loan application should be entered. Where the date for obtaining loan approval is to be entered, avoid entering pre approved â€"enter the date by which the loan must be approved. The use of “maximum†where the loan amount is to be entered or the word “minimum†where down payment is to be entered is totally inadvisable. The word “required†should not be substituted when an area is to be quantified. Simplicity, brevity
and conciseness are in and “hip†and “cute†are out when it comes to offers.
Always remain aware that purchase agreements are subject to review by attorneys, lenders, title companies, appraisers, Louisiana Real Estate Commission and courts. Therefore do your best to prepare and submit well worded, objecttive , easily understood offers at all times.
6. When submitting an offer to purchase which is predicated on the sale or completion of an act of sale of another property, provide the listing broker with a copy of the purchase agreement, on said other property, when at all possible. You will enhance your chances for acceptance of your offer, as the listing agent will not be lead to believe that you are concealing something by refusing to provide a copy of such documentation.
7. Never use the word “ clear†when referring to a termite inspection â€" if you do you may well be implying far more than the Wood Destroying Insect report(W.D.I.R) which basically limits the inspection to the accessible areas of the property-not the property in its entirety.
8. When imposing conditions in a purchase agreement, make them concise and as a general rule there should be a date by which the condition should be satisfied. An example of such a condition would be as follows. This agreement to purchase is subject to verification that zoning on subject property is C-1 Commercial, within 10 calendar days from acceptance hereof. Another example would be as follows. This agreement to purchase is subject to purchaser’s ability to obtain an occupational license to operate a children’s day nursery within 21 days of
acceptance, hereof.
9. There are several factors to consider when determining price to be offered on a property. Comparable sales are of the utmost importance. Recent sales of similar properties are referred to as “comps’ and you or your agent should locate several in order to shed some light on what buyers have been paying for such properties, within the past 6 to 12 months (preferably 6 months or less). This should prepare you to submit an informed offer. Another factor which can be determined is time on the market, price adjustments, how many brokers have had the property listed and if it has been under contract recently. Knowing why the owner is selling
may help you to determine the seller’s urgency and motivation. A seller who is highly motivated or urgent is generally more receptive to lesser offers than one who has no compelling reason to sell. It is wise to look for areas where you might be able to accommodate the owner in such areas as occupancy, act of sale date, a quick sale or one which is slower as a means of having a lower price accepted as a result of such accommodation. Remember, purchasing real estate is a two way street-if you strive to get every thing in your favor and ignore the seller’s needs, you will more than likely wind up with a rejected agreement to purchase.
10. Try to remove the emotion from your purchase of real estate and substitute intellect and logic when possible (easier said than done at times). You will wind up with better buys and with better terms. If the seller reacts emotionally to your offer and becomes inflexible, hostile or simply uncooperative, this may indicate that you back off and move on to another property, giving the seller time to cool down and reflect on the negotiations to determine whether he or she was unreasonable. After a period of time the owner may be willing to reconsider your offer. When this is done you must be ultimately prepared to lose the property if another offer develops. Negotiating price and terms is not necessarily an easy task and can become unpleasant and time consuming. The use of an experienced, expert agent in negotiating price and terms is highly recommended and will inevitably get you the best results possible.
11. Never assume that because a non real estate item, for example a refrigerator, washer, dryer or free standing stove is in a house that it is included with the sale, nor should you take verbal representations of non real estate items or MLS printouts or flyers to determine what non real estate items are included. Always enumerate such non realty items in the purchase agreement, spelling out specifically what is to be included as precisely as possible. In the event of a dispute the written purchase agreement will almost invariably prevail.
12. The deposit outlined in an offer is most important. Sellers are impressed with larger deposits as is the listing agent-it looks business like-it is business like. Stear clear of promissory notes. When and if you are in competition do not hesitate to submit your deposit with the offer (even though it is not due until acceptance). Try always to submit deposits larger than the norm. Your offers will get more consideration and will stand out from those with lightweight deposits.
In summary in order to negotiate the best price and terms make your purchase agreement, simple, uncluttered, prepared on a word processor or typewriter, with crystal clear terms and conditions. Leave no room for interpretation. Your agreement should be straight forward, well worded and if at all possible, delivered in the original. (agents who are only 1 or 2 miles from each other at times, fax offers, instead of delivering the original). Always have your agent determine that the listing agent has received the offer, whether it has been delivered in the original or faxed. This is extremely important for it is the listing agent’s responsibility to convey, immediately all offers to the owner in a timely fashion, for the owner’s consideration. Allow, normally 24 hours for consideration of your offer-extend only if circumstances warrant it. Avoid “hip†or “cute†language in agreements for there is no place for such things in an offer to purchase. Seek out, study and act on comparables sales for they tell you what is being paid for similar properties. Attempt to eliminate emotion in your decision process, when purchasing real estate. You will wind up with a better buy and one which makes more sense ! Endeavor, when possible, to accommodate the seller. I trust that you will find the preceding informative and useful.
The prcedeing article is subjective in nature and represents the opinion of the author/ real estate agent â€"Donna Rothwell Bergeron
