There are many new realities in the real estate market today. One of them is that buyers want to make low offers on many properties, in an effort to determine if any of them will “stick.”
Buyers also want to know early on which sellers are willing to “work with them,” and which ones are inflexible with price and terms.
And since preparing the typical real estate offer is arduous and time consuming, there has to be a better way to negotiate an acceptable purchase and sale agreement.
How much netter would it be to offer a simple “Letter of Intent,” either written or entered online, that addresses specific items such as price and seller concessions to be followed with a contract only if and when the basic terms are acceptable?
The letter would essentially consist of sales price, closing costs, length of due diligence, closing date, and all special stipulations.
Once accepted, a purchase and sale agreement would be proffered within a limited time frame, perhaps two days.
It would encourage more offers, speed up the process, and save a lot of time that is currently being wasted on deals that will never happen.
And it could help shrink the current inventory of properties on the market, which is good for everyone!
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Richard, I like it! This could really help cut down on paperwork and streamline the process!
I think the hardest part may be getting the other agent to go along with this process.
Richard, it would certainly be nice to get a feel up front to avoid all the paperwork. On one of my listings, the agent called to discuss the seller's flexibility and the rationale for the listing price. We arrived at a number that might serve to be agreable to all parties without insult to anybody, and it was pretty close when the final contract was presented.
Hi Richard -- that is an interesting idea. I believe that's the procedure followed in commercial real estate here in California, but certainly not residential. We're buried under paperwork.
I have done this in the past with an out of town buyer rather than fax and re-fax and initial...And then when all is agreed, we put it on paper. Of course I make sure that buyers know that unless there is something written and signed by all, there is no contract and the seller could move to someone else.
That would be a great way to speed up the process provided that everyone is on the same page. By the way, nice picture of the Male Academy Museum. It is right down the street from my house.
Richard, we have with in our software package, a little used offer to purchase form or a letter of intent. Most Brokers like to write a contract, in case its accetable and signed, then there is no need for additional contracts to be done.
Richard,
I do not know what youre talkig about? We already have that. It is called a Listing Agreement! The truth is nobody knows what any Seller will do in any given situation, not even the Seller.
Doing a little due dilligence and previewing all of the homes that fit a clients needs will give you a snapshot view of what most Seller's are willing to do. Those who want to play will have fair prices and easy access. Those who don't, wont.
I think having a letter of intent would be a much more efficient way to go with short-sales in my area. It seems that most agents treat incoming offers on their short-sale listings as if they are only letters of intent. Why should I go through all the effort of creating the offer just so that I won't get any response from the listing agent?
The downside to this is what happens if multiple parties actually respond back to the letters of intent - the buyer usually can't buy all the properties and now there's a problem.
But I do like the concept considering we have so many problems in the short-sale area.
Richard.....I've negotiated many tracts of land in my area and a letter of intent is exactly how we start the process....we cover the major issues and the attorneys finish the detail in a purchase and sales agreement.....
Love this idea Richard! It would save a lot of time in the beginning, I can honestly say I don't need any more practice in filling in the 14 page contract.
I like the idea in theory but don't ever see it happening. Too bad.
This approach has been happening here on a verbal basis. The buyer's agent calls the listing agent and outlines the offer the buyer is planning to write including price, loan type, credits. The listing agent is then asked if this is an offer that would be welcomed by the seller, and should the buyer move forward with the effort?
Hi Richard, there is a lot more "pre-negotiating" going on between agents before anything goes to paper. I think it is a sign of a lopsided buyer's market. It will probably go away when the market shifts.
Richard...I do this now on a limited basis. My seller and my buyer, I will work on getting things ironed out ahead of time when possible. Saes everyone a lot of time.
Richard: For the constant lowballers, this is certainly a reasonable suggestion. Nothing got me used to writing offers like my bargain hunter buyers.
Add to my wish list, for digital signatures to be accepted by everyone involved in the sale!
Richard, I will (with all due respect) beg to differ. As professionals, we know the values of properties in our market. If you wish to represent a buyer that wants 'the steal' then we should go ahead and write up the offer. If it's a totally unrealistic buyer that wants nothing more than to waste your time, it's your decision to work with him.
When I represent my sellers, I will not accept a verbal offer and I doubt we would accept a letter of intent.
Good morning Richard,
I think your market is different from ours. I like Gabe do not accept verbal offers. My listings are priced and staged well and receive 97-98% of asking price. If an offer comes in low we just go back with very little off the price and a list of the comparable solds..it's hard to argue with facts. But in some areas of the country the market is not as stable as ours has been and the consumer is afraid of paying to much or even buying at all! Good post on a way to deal with offers in your area.
Richard - I've had occasion to call the listing agent and talk through what my buyer is willing to offer. Saves time and if they are interested we put it in writing. Also gives the buyer a better idea of the market. Low balling in some neighborhoods will not work at all here in Middle TN.