Friday, July 19, 2019 / by Barry Owen
We find that PERFECT home for you. You decide you would like to submit an offer. Because the Nashville market is moving so rapidly these days, it is essential to move quickly when you find the right home. Daily, agents are telling stories about how devastated their clients were because their "dream" home was bought right out from under them. We can construct an offer anywhere (sometimes at a free table at the local Starbucks). A binding “contract” is created only when there is a "meeting of the minds" on all terms. It is very important to keep everything in the perspective that this is NOT necessarily an adversarial experience. We advise you not to take the Seller's response to your offer personally . . . just use that response to help you determine your own next move.
We will methodically work through the Purchase and Sale Agreement to make sure you understand the terms. At times, this may seem tedious to you, but we feel it is extremely important that you fully understand what your responsibilities will be should the offer be accepted. Things we consider:
Your price - based on our Analysis in Step 5
Your financing structure (Who the lender is and what type of financing)
Your settlement (closing) date preference
Your Possession date preference (date you wish to move into the house)
Your inspection preference (When to commit to do it)
Miscellaneous provisions (ANYTHING not covered in the legalese)
Any contingencies you might need to protect your position.
Once you are satisfied with all of the terms and conditions of the offer, you will sign bottom of the last page; and we will present your offer to the listing agent along with your check for the earnest money.
Negotiating to BUY
Once we have prepared your offer, we will connect with the Listing Agent and present it (in person if possible). The listing agent will present your offer to the seller as soon as possible. The seller has three options:
ACCEPT your offer with no changes and sign it (making it a CONTRACT), and we will proceed toward closing.
COUNTER your offer by changing any one or a combination of your terms and conditions. The offer would then come back to us, and you would have the same three options. This could go back and forth several times until there is agreement on ALL terms and conditions. We proceed toward closing.
REJECT your offer. This would "kill" your offer, and the only way you could buy that property would be to submit a new offer.
Very few offers are immediately accepted without any changes, thus we enter a period of negotiation. Below are some insights about this negotiating process and how we "strategize" to negotiate the best terms and conditions for our clients.
Multiple Offer Scenarios. Occasionally, more than one buyer will want to purchase the same house. The standard practice is for the Seller's Agent to submit any received offers to the Seller as quickly as possible. The Seller's agent will usually notify all potential buyers and/or their agents of the existence of all written offers received as soon as possible but will NOT disclose any of the terms of these offers, unless directed to do so by the Seller. Most Sellers will choose to ask all of the Buyers to submit a “Highest and Best Offer” . . . and then will select one offer to negotiate. Others might simply choose to negotiate the offer they like best knowing that the risk of choosing to have buyers bid against one another is that all buyers could become angry and decide to withdraw from the negotiation.
The Dead Moose is that thing that sometimes keeps buyers and sellers from coming to agreement on a contract. It is as if there is a dead moose under the table and everyone can smell it and knows it is there, but no-one wants to deal with it. Quite often, the external appearance is that a contract is not working out because of MONEY . . . The seller is refusing to accept less and the buyer is refusing to pay more . . . Yet, the reason the seller and the buyer are even in conversation in the first place is that the seller wants to sell the house that the buyer wants to buy . . . and so I often ask my clients at some point in the negotiation if there is something else (a dead moose) which is making them uncomfortable about this move . . . the answers I get range from concern about the schools to concern about the condition of the house to discomfort with the moving dates . . . and even to real discussion on whether or not the client really wants to move after all. The most important thing at this stage is to recognize the dead moose and deal with it BEFORE actually coming to terms in the contract. I would much rather have all of the real issues surface during the negotiation than to be surprised during the home inspection or (worse) at the closing.
The Selling Price is usually the last issue to be ironed out. By way of example, let's just say that you are in a negotiation for a house and the seller's last counter offer is $160,000, but you do not want to pay more than $156,000 . . . . $4000 apart . . . To the seller, this $4000 represents cold, hard cash - EQUITY . . . This is money that the seller is planning on taking to their next house . . . To the buyer (Assuming the buyer is getting a loan), this $4000 increases the loan payment marginally over 30 years . . . keeping this perspective helps during the negotiation.
The Bottom line of negotiating is MOTIVATION. Our purpose in any negotiation is to come as close as possible to the ideal terms and conditions for our clients. We know that the agent for the Sellers has the same purpose. As we advise our clients, we consistently speak of the need to discover the Seller's REAL motivation for moving and then to determine if the Buyer might be willing to give a little in that regard (close a few weeks earlier) for a greater benefit in another regard (pay less for the house). We find that a successful negotiation necessitates BOTH give AND take.