This April, one of Inman’s most popular recurring features returns: back to basics. Throughout the month, real estate professionals from across the country share what works for them, how they’ve developed their systems and tools, and where to invest personally and professionally to drive growth in 2022. It’s always smart to get back to the basics with In-Man.
Are you looking for more advice? Check out Inman’s New Agent Basics.
In today’s highly competitive market, listing agents filter offers to find well-written offers and demonstrate the knowledge and experience of the buyer’s agent.
With multiple offers still ruling the day, it’s not uncommon to hear a buyer’s agent say, “The best offer is full cash with no contingencies.” “Au counterire,” a large-volume listing agent I spoke to recently stated. He told me “we don’t automatically accept the ‘highest’ offer or ‘full cash'”.
“In fact, they are often poorly written — buyer agents either don’t fill out basic information, fail to include required documents, and in some cases, fail to consider buyer restrictions. To be honest,” he added, “We typically use poorly written offers. To take advantage of better offers from more efficient agents.”
In closing, he said, “If an agent doesn’t know how to write an effective presentation, how can we trust that they know enough to get us safely to the end?”
The goal is to write an offer that does not need opposition or correction.
Here are the top seven things to keep in mind 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 offerings. Our team not only puts clear directions in the agent’s comments section of MLS, but we also include writing instructions in the disclosure package.
We include basic requirements such as pre-approval letters, proof of funds for down payment and other important items we want to see included in any offers. While it was designed to help buyer’s agents succeed, it does come with one caveat: Agents should read it. I am amazed at how many agents seem to lack basic reading skills.
Contact the listing agent
Although this should be obvious, we often get offers sailing suddenly without warning or prior contact with the buyer’s agent. Most often, these offers can be categorized as “Hail Mary” efforts that the agent sends in accordance with the wishes of the buyer.
Effective bids start with a solid understanding of the seller’s needs and wants, and usually the only way to obtain this information is to speak directly with the listing agent.
- What does the seller really want or need?
- When do they want to close?
- Do they need to rent?
- Is this a “as is” sale or is it open to doing some repairs?
- What periods of emergency do they hope to see?
Experienced agents have a comprehensive list of questions to navigate through to ensure they cover all potential bases.
In addition to building a relationship, a lot of pre-negotiation can happen during these calls that can pave the way for an acceptable contract. You may also discover that they have already received offers that are higher than the maximum buyer limit, which may save you from having to write an offer that will actually expire on arrival.
Fill in all the blanks
Nothing is more frustrating than shows with missing key information or data written in the wrong area. We do two things to help our team members write the best proposals possible.
First, we prepare forms that pre-load the important information that should be in each view. Second, we encourage everyone to use the Tab key when writing presentations, so they should stop at each blank. This extra step helps ensure that the main partitions are not left blank.
Finally, our agents check the financial department to make sure the numbers are in the correct areas. I’ve seen more than one show where the buyer’s agent put the loan amount on the line for a good faith deposit.
Follow area practices and protocols
In our area, we have many MLSs and regions that have different rules. For example, in our province, the buyer pays the title insurance fee and the warranty fee. Five miles down the road in the next county, the seller pays, and other nearby counties cost 50/50.
We often get offers that include city tax for cities that don’t have tax and offers that don’t include city tax for cities that don’t. In either case, we have to create an extension or counter-offer to make the correction. Currently, our sellers are expecting a good faith deposit of 3 percent of the $30,000 purchase price on a $1,000,000 home. Even with that expectation, shows come with serious money of $5,000 or less.
Bottom line, take the time to understand all the practices and protocols of the area you are writing the presentation in and then follow them literally.
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 contingency. If the valuation contingency is removed, be sure to run the scenarios to ensure that they will have enough cash to close in the event the valuation drops.
If comprehensive disclosure packages and reputable inspection reports are provided in advance, it may be possible to remove the inspection contingency. If the seller wants to checkout quickly, find out how quickly your lender can close or sign up with programs like Homeward that will allow you to buy with cash and close within three days (subject to local standards).
Understand the rules of lending
A common mistake we see is to include inspections in the offer even though the seller has made it very clear that they will not do any repairs. While purchase agreements vary from state to state, most include an option for buyers to perform inspections during the discovery phase of the contract even if they are not specifically written.
For example, if the purchase agreement contains a written termite check, the lender has the right to request a copy of the report and may insist that repairs be made before closing the escrow even though the seller has stated so. Selling “as is”.
The opposite can be true for government-backed programs such as victim assistance loans, which typically require removal of wood-destroying pests that must be written into the contract. Apartments need HUD approval to qualify for FHA loans. In our area, we do not see many cooperatives, which also have specific lending rules. Make sure you understand the requirements for the type of loan the buyer is using and write offers accordingly.
Include a note from the buyer
While classic buyer “love letters” can pave the way for fair housing violations and are currently under scrutiny, a simple note from buyers can help sellers understand why they are interested in purchasing their specific home and improve the odds of success. In order to prevent potential fair housing problems, these notes should not include any photos or personal information, but should focus only on the features of the home that are of particular interest to the buyer(s).
To reiterate, the goal is to write presentations that are well-designed, complete, and acceptable without a counter-corrective supplement or the need to rewrite them. Often this is what separates skilled clients from the rest.
The better the presentation is written, the higher the chances of success, even if the numbers and jargon are not necessarily the highest or the best.