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3 Tips for Submitting a Purchase Offer to Buy a Home in Sacramento
Apart from the fact that this Sacramento real estate agent could probably write a book about how to submit a purchase offer, I don’t have that much time in my schedule this morning and nobody has offered to pay me for it. Yet, I would like to address 3 tips that would help a buyer’s agent to get an offer accepted. These are things that if any agent thought about it for a few minutes or looked at it from the viewpoint of a listing agent, they would automatically do. But many remarkable ideas are simple.
Before sending an offer, please review these simple tips:
- Send one PDF
- Don’t send disclosures
- Email in low resolution
There is no reason to send a bunch of different files. Let’s set aside the fact that by sending more than one PDF, a buyer’s agent is taking the chance that a PDF file might not end up as an attachment by oversight or a seller might not open it, and look at what a hassle it is from a receiving viewpoint. First, I have to set up a folder to accept all of the PDFs I receive from a buyer’s agent. I can’t just save the offer to my desktop nor dump the offer along with its supporting documents into the property folder because they will get lost and separated. All separate documents require their own stinkin’ folder. I hate to think what the seller does with the documents.
Second, then each of those PDFs have to be opened to be read. Some require separate applications to open. For example, if a preapproval letter arrives in a Word format, and I don’t happen to have Word open — because it’s not a program I use very often — then I need to sit and wait for Word to open. It’s annoying.
Now, don’t get me wrong, I am very excited to receive an offer for my seller. That is my job: to get a purchase offer. But let’s say it’s a seller’s market, like the market is today in Sacramento, and the seller might receive 5 offers or more. And the offer that arrives in piecemeal is just like most of the other offers. A seller might open only the purchase offer and none of the supporting documents just to note the price and forget about whatever else was sent.
Think of the end user, the seller. Are you making it easy for the seller to read your offer and accept your purchase offer? Are you sending documents that the seller doesn’t need such as disclosures and market condition notices?
To go into contract, sellers in Sacramento need the purchase contract, the agency disclosure, the earnest money deposit copy and the prepaproval letter (or POF). That’s it. No other documents or disclosures.
One last tip, make sure your PDF is not so large that it can’t be downloaded. Some buyer’s agents accept one-page scans returned as JPGs from the buyer. Those JPGs can be such a high resolution that the file becomes too big to email. Downsize it. Look at the MBs before hitting send in your email. If it exceed 5 MBs, that listing agent and seller might not be able to even open your attachment.
Can you imagine losing a home because the seller couldn’t open your offer?
How to Submit a Back Up Offer
The real estate market in Sacramento is so crazy that a really smart move for any aspiring buyer might be to try a back up offer. The problem is no inventory. Now, you would think that little inventory would have solved the problem of flakey and indecisive buyers, especially for those buying Sacramento short sales, but it hasn’t. Buyers still abruptly cancel transactions even though their chances of being able to buy another home are dwindling as surely as the minute hand on that clock continues to move.
An agent called me several days ago to explain why his buyer was canceling. Like I give a crap. Canceling is canceling. He said the buyer’s lender did not explain Mello Roos to the buyer and therefore had incorrectly quoted the buyer’s pending mortgage payment. The buyer had not counted on having to pay an additional $100 a month or so. Except when I looked at the original offer tracking sheet, I discovered the buyer’s first offer had been $10,000 over market value. I was the person who had explained to the buyer’s agent that the home had to appraise. The buyer had originally agreed to pay a higher mortgage payment, but now that the price was less, that same payment was freaky. Wha?
Logical or not, buyers do suddenly cancel purchase contracts. That part hasn’t changed. I don’t think they understand the market, and why should they? Home buyers are bit players. One person buying one house. Investors and real estate agents who are active in the Sacramento market realize how difficult it is to buy a home right now. The median sales price has gone up from $155,000 a year ago in October to $180,000 last month. Yet, another reason why it’s smart to lock down a potential purchase through a back-up offer. Lock in that lower price.
When a seller signs a back-up offer, it means if the existing buyer cancels, the new buyer moves into first position and becomes the buyer. There is no going back on the market as an active short sale or active listing. The home is never exposed to the market a second time.
But you can’t just send the listing agent an offer and say:“Keep this in backup.” Well, you can, but it won’t be in backup. You need to submit a formal Purchase Agreement Addendum (PAA) with your purchase contract. Moreover, you can’t just sign a PAA and send it. It must be completed. Don’t cry Ma. If an agent doesn’t fill in the two spots in Section 1, the PAA is incomplete. One spot signifies the position for the buyer. Does the buyer want to be in #1, #2 or #3 position? The second spot indicates how long the buyer is willing to wait for the existing buyer to cancel. Is it 10 days? 120 days? A year?
You can also use a much simpler form, the C.A.R. Backup Offer Addendum.
Of course, if a buyer offers less than list price or something else is incompatible in the offer for the seller, the seller is not obligated to accept a back-up offer. Sellers are never forced to accept a back-up offer — even if the home is offered for sale as an Active Short Contingent. But most sellers are happy to receive a back-up offer and will accept. Like with anything in real estate, your offer needs to be signed, dated and in writing.
