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Thoughts About Counter Offers in Sacramento Real Estate
The question for a Sacramento listing agent when working with offer negotiations is often whether sellers should sign purchase offers coupled with counter offers or should sellers sign strictly the counter offers and deal with the rest if and when it comes to fruition? Part of this rests on the urgency of the matter and the situation at hand. For example, if the seller and I might believe the buyer will not accept the counter offer, then it seems sort of pointless to sign all of the other paperwork. Or, if the seller is in a rush and doesn’t have time to sign a bunch of documents, we might just deal with the one-page document in the heat of the moment.
You might read this and wonder why would a listing agent and her seller send a counter offer if they don’t believe the buyer will accept? Many reasons for this. First and foremost, it is almost never a good idea to ignore a purchase offer because it’s an attempt, even if it’s a feeble or ridiculous attempt, to buy a home. My policy is a counter offer is probably a wise idea. Because you never know.
People are freaky weird. I realize this but not everybody does. Every time you think you know exactly what a person will do you are probably proven wrong half the time. You can’t always predict future actions. People will respond however they want, and it could be very different under certain circumstances, and since you don’t possess first-hand information (unless you listen to this person snore at night and, even then, there is no guarantee), you can’t really know how somebody will react until you hand over the ammunition.
Second, the buyers might decide to counter back with different terms but same end result or they might counter with a completely opposite issue. Sending a counter offer shows the seller is willing to negotiate and work with the buyer to sell the home in some manner. It could even be a full-price counter offer, and that’s perfectly acceptable.
Sometimes, it’s a negotiating tactic to send the entire purchase contract signed by the seller, along with a counter offer signed by the seller. That signifies to the buyer that the seller is motivated to move forward and that the seller fully expects the buyer to accept the counter offer. I generally advise my sellers to sign all of the paperwork because it’s a more positive statement to send to the buyer. Especially since it’s a bit subliminal.
Listing Agents: Watch for Purchase Offer Mistake on CAR RPA
Buyers don’t know what they sign so purchase offer mistake happens.
The most common type of purchase offer mistake I am noticing lately in a California Residential Purchase Agreement is a checked box that could cost the seller a ton of money if it’s not countered out of the contract. Now, true, some buyer’s agents go crazy hog wild checking boxes left and right. I see contracts that state the seller will pay all HOA fees when there is no homeowner’s association. Or, they state sellers will pay city transfer fees when the property is not located in a city.
One of the main ways buyer’s agents make a purchase offer mistake is by uploading a template in which all of the boxes are checked. I know that’s possible because I use a template for the MLS Profile, and every so often, I forget to uncheck “tile” and check “comp” because my template is set up for tract homes. I sell a lot of tract homes.
But I also move a lot of inventory in the Capitol Corridor and tile is not a common type of roof in the inner city. Fortunately, I have back-up protections in place. Often, my fabulous office assistants will question how a roof can be both tile and comp and they correct it. Or the sellers notice it and they have 3 changes to fix errors prior to publication.
Not so when we’re talking about a purchase offer mistake that is about to change the terms of the contract and the buyer’s agent just messed up. I’m talking about Paragraph 7-2 Bi and 7-2 B ii. These paragraphs refer to the seller paying for government-mandated retrofits and also, without naming it, the Water Conserving Plumbing Fixtures law.
This law says all homes built before 1994 must have water conserving plumbing fixtures. However, it is not a contingency of sale. Sellers are not required to replace all of the non-complaint shower heads, water faucets and toilets. UNLESS that box is checked on the RPA. Do you see the problem? If a listing agent doesn’t catch this mistake and remove it from the contract, her seller could be in for a world of painful, unexpected expenses.
Of course, it’s also possible since the buyer’s agent most likely checked that box in error, so the buyer’s agent would never realize she could demand the seller bring all water plumbing fixtures to compliance. But who would take that chance the agent wouldn’t notice it? Agents aren’t stupid. My name is Mork. They just make mistakes.
Sacramento Agents Can Cause Buyers to Lose the House
Sacramento agents should thoughtfully craft purchase offers to avoid counter offers in hot markets.
The one thing all Sacramento agents should try to avoid have happen with their buyer’s purchase offer is to give the seller’s agent and seller a reason to issue a counter offer. A few weeks ago, a seller had a counter offer out, and while we waited for the response, another buyer swooped in and submitted an offer that the seller accepted. After pulling the counter offer, of course. If one can avoid the counter-offer situation all together, a Sacramento agent can increase the odds her buyer won’t lose the house.
The Elizabeth Weintraub Team members realize this and we try to avoid counter offers at all costs. When my husband and I bought our house in Hawaii, for example, there was already a counter out. Our offer caused the seller to pull that counter, too. Buyers, don’t ever let the fact that there is an existing outstanding counter offer discourage you. Jump on that baby like hot fudge on a sundae.
Some Sacramento agents never call the listing agent before submitting an offer. Even in this market of low inventory and high demand, which makes this a seller’s market. They just shoot over an offer, thinking this is how they’ve always done it, but maybe that purchase offer contains things that need to be countered. Now they’ve set up their buyer for possible failure.
It’s not just the sales price a buyer needs to worry about. It’s not always the big things. Often, it’s the little things. Here are some of the small things that Sacramento agents can do to cause their buyers to lose the house by inadvertently forcing the seller to counter:
- Asking for personal property that is not included in the purchase price
- Bucking local custom on how fees are split
- Requesting government retrofits, i.e. water-saving devices
- Demanding to choose title and escrow
- Asking for longer than 30 days to close
- Not tightening contingency periods
Success is often buried in the details. In the fine print. And it is to a buyer’s advantage for her agent to find out if there are special things the seller might hope to see in the offer. Maybe the seller needs a few days to move or to rent back? Sacramento agents won’t know if they don’t call the listing agent. (Of course, that agent would have to answer her phone.)
If you’re looking for Sacramento agents who work to avoid counters for their buyers (and answer their phones), call Elizabeth Weintraub at 916.233.6759.
What is Wrong With This Sacramento Home Offer?
It is rare to receive a perfect Sacramento home offer.
The way I sell real estate in Sacramento works extremely well for my sellers because I am on the constant look out for what is wrong with this Sacramento home offer. My first instinct, unlike many Sacramento Realtors, is NOT oh, boy, we have an offer, let’s sign it. As in: press hard, third copy is yours. My sellers and I intend to close the transaction. To us, a purchase contract is a legal and binding contract issued in Good Faith. To other agents, though, we can be at opposite ends of the spectrum before ever going into escrow.
Of course, as with any purchase offer, the way it is completed by the buyer’s agent is more than half the battle. First the offer needs to be completed correctly (spelling, math errors, unchecked boxes, blank lines, wrong forms) and much of the time it is not. But that is no surprise and not the primary issue. Those are clerical errors we can fix.
The real issue is the motivation, intentions and qualifications of the buyer. In a hot seller’s market in Sacramento, the most obvious sign in a Sacramento home offer is typically the sales price. Too low or too high can be a red flag, and I never know which we will receive. Digging deeper, we might find, for example, that the buyer has never seen the property. When buyers don’t view properties, it means they might have more concerns and try to renegotiate later.
It can be a kiss of death to remove a home from the market and put it back on market. Sellers lose the momentum of being a brand new listing in a hot, hot Sacramento market. Now the sellers’ home is damaged goods. And why? Because some agent tried to take a short cut and not show the property, and then tried to induce the seller to accept the Sacramento home offer by offering pie in the sky.
There are many other factors that enter into the work of analyzing a Sacramento home offer. The result can be as simple as a buyer offering less to entice a counter offer, which means once the counter is out, another offer is likely to arrive at full-price without the bickering, and the seller will jump on it, and withdraw the counter. Bickering on the front end can lead to bickering in the middle.
This Sacramento Realtor is patient. I wait for what is best for my sellers and advise accordingly. Call Elizabeth Weintraub at 916.233.6759.
Tips for Buying a New Listing in Sacramento
Listen to your agent about making an offer on a new listing in Sacramento
Home buyers tend to pay a lot of attention to the days on market, which doesn’t always mean anything except when the home is a new listing in Sacramento. When the home is a new listing in Sacramento, the days on market, regardless of market conditions, beg for a different offer strategy. That strategy says if the price is fair, showings are high, and the buyer needs to buy that home, the best move is not to try to negotiate.
Buyer’s agents sometimes take a cavalier attitude. They say the buyer will learn a lesson when the buyer loses the house, and that’s why sometimes it takes more than one offer to buy a home. If the buyer refuses to take his or her agent’s advice, the agent will just look for the next house. It doesn’t always matter to the agent which house the buyer ends up buying — not like it does to the buyer — because the agent will get paid either way.
I am often amazed when a new listing in Sacramento is on the market for a few days, and the buyer tries to negotiate on the price, especially when the price is fair. It’s not always a multiple-offer situation that will kill the buyer’s offer. It’s not like the seller is sitting on an offer and shopping it, hoping to get a higher offer, like some buyers erroneously believe. The problem that arises is when the offer is less than satisfactory to the seller, and the seller prepares a counter offer. Whole different scenario.
Agents will sometimes suggest to the listing agent that the buyer is open to a counter offer, which they really should not do as it undermines fiduciary. But even so, the problem with a counter offer is that counter offers eat up precious time. They are not instant. It can take a seller 24 hours to sign a counter offer. Then, there could be a time delay with sending the counter to the buyer’s agent, and the buyer’s agent can take more time to deliver the counter to the buyer. It is not considered final until the listing agent receives the counter offer back fully executed.
During this time period, another offer could come arrive. By necessitating a counter offer, the buyer just opened a window of opportunity for another buyer to submit an offer. A better offer. Perhaps with more suitable financing, a bigger down payment and best, no hesitation to show the seller that the buyer really wants that home. The seller is free, prior to delivery, to withdraw the counter offer and, sometimes, that’s exactly what sellers do. And buyers have done it to themselves. Just food for thought the next time you spot a new listing in Sacramento that you might want to buy.
