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How Not to Present a Purchase Offer in Sacramento
A real estate agent I first met 5 years ago when I interviewed her for my book, The Short Sale Savior, and later she referred a relative to me whose home I sold in Sacramento, serves on an Education Committee at a REALTOR association in the Bay area. She asked if I would do a webinar for her agents to help them to get purchase offers accepted. I generally don’t agree to do webinars or seminars because I don’t like them. Who am I to tell people what to do? Seminars are ex-husbands’ gigs, not mine. But I agreed because I can’t say no to this person. She is so danged sweet!
Sweetness gets you everywhere in this life. Vinegar, not so much.
I might start with talking about what NOT to do when writing an offer to buy a home. Because I list such a huge volume of homes in the Sacramento area, I see all kinds of offers. I can estimate that I probably receive more than 1,000 offers a year, maybe even twice that amount depending on whether it’s a seller’s market in Sacramento. It’s common today to receive a minimum of 20 to 30 offers for entry-level listings.
The unspoken truth is at least half of those purchase offers are garbage. I’m being generous with that percentage. That’s the part that agents don’t talk about because nobody wants to believe that a buyer’s agent can’t write an offer, yet that’s the first problem with many offers. There is no nice way to sugar coat this. I continually find myself defending the competency of my profession to sellers who can’t believe their eyes at some of the offers we get.
In a seller’s market, a seller and her listing agent can be very selective. Sure, there are markets in which the tables are turned, but our present market in Sacramento is a seller’s market. This means a seller can be looking for the very best offer and might be examining an offer with an eye for a reason to reject it. This is a very different approach than hoping to accept an offer, which is how sellers view offers in an opposite market. Unfortunately, buyers and buyer’s agents give sellers plenty of reasons to reject an offer. If a seller is considering 2 identical offers, one offer may get accepted simply because the other was rejected.
The trick is not to set up an offer for possible rejection. Here are some things an agent and her or his buyer should try NOT to do when presenting a purchase offer:
Clerical Offer Mistakes
- Misspelling of names
- Wrong property address
- No dates
- Missing signatures / initials
- Incorrect mathematical calculations
- Outdated forms
- Missing addendums or supporting documentations
- Sending unnecessary documents / paperwork
Writing FHA or VA offers on listings that do not offer those financing terms?
Sending the offer to the wrong agent or the wrong company or in the wrong format
Not reading the confidential agent remarks / attachments nor following specific directions
Exhibiting hostility toward the listing agent or seller
- Sending the agent a copy of the MLS print-out or list of comparable sales
- Demanding concessions and other unusual terms in the offer
- Belittling the home, the seller and the home’s location
- Yelling and screaming and use of profanity
No cover letter with the offer, hoping the terms and conditions speak for themselves. Often, they do not.
Sending a generic cover letter saying the buyer loves the home. All buyers love the home or they wouldn’t be writing an offer.
Forgetting that all offers look the same. Only the numbers and names change.
The bottom line is don’t give the seller any ammunition to reject an offer. In multiple-offer situations, a buyer should not allow her offer to be automatically eliminated from the competition. Ideally, a buyer wants her offer to be the best, at the least an offer worthy of top consideration. Give it a fighting chance.
Why Did the Seller Reject Your Offer to Buy a Home?
If you’re looking for the secret about why the seller might reject your offer, you might be sorely disappointed in my answer. That’s because in just about every situation you can name in the Sacramento real estate market, it is the seller who chooses the buyer, not the agent. As such, the seller can have a bazillion different reasons why the seller prefers one offer over another. Yes, at this point you’re probably thinking: what about the listing agent’s input? Doesn’t the listing agent influence a seller’s decision? I believe that it is the listing agent’s job to guide, not to decide.
One way a purchase offer can gain traction is to be written correctly. This may sound overly simplified and you might wonder how anybody could write an offer incorrectly, but that’s obviously because you are not a listing agent in the greater Sacramento region. If you were a listing agent, you would know how offers can be written incorrectly.
Write the offer without mistakes is the number one rule.
It’s difficult to write a purchase contract without any mistakes. It means an agent needs to re-read MLS to make sure all of the directions were followed. Sometimes, listing agents insert tips or requirements into MLS, so it’s a good idea to review the confidential agent remarks and look for attachments in MLS. Veteran agents know that we live in strange times. It also means checking the correct boxes, making certain the buyer’s name is spelled correctly and matches the preapproval letter, double-checking the math and terms, using the right property address, including required documents, and so forth. Dot I’s. Cross T’s. Don’t give the seller a reason to reject your offer.
I can’t tell you how many offers the Elizabeth Weintraub Team gets accepted in Sacramento simply because the offer is written correctly. No other reason. It’s not our ranking or the fact that other agents respect us, it’s that our offers generally do not contain any mistakes. Because what is there for a seller to base a decision upon apart from price / net proceeds? In a short sale situation, for example, the seller isn’t even receiving any of the profits so price, while important, is really not a primary consideration. Commitment to the transaction is paramount, as is the ability to close escrow. In a short sale, you’ve gotta be willing to wait for short sale approval and be able to close without delays or hiccups.
A while back an agent changed the amount of the earnest money deposit in a purchase contract that I received. The amount was cut in half. It was simply crossed out and rewritten, without an initial. I did not know whether the agent changed the earnest money deposit or if the buyer had altered the contract, but in any case it was enough for me to question the buyer’s agent. I felt this was an issue the seller might want to know and she may raise the question herself. Why did the buyer lower the amount of the earnest money deposit on this short sale?
The buyer’s agent explained that the buyer did not want her money tied up for a period of possibly 3 months. Probably because she would be losing out on that whopping .5% interest rate paid by local banks — that 60 cents paid over 90 days.
The seller was looking for a committed buyer. A buyer who really wanted the home. A buyer who was willing for 3 months. This is a seller’s market in Sacramento. Many sellers receive multiple offers. Sometimes, a seller can receive a dozen purchase offers or more within 24 hours. In a short sale, many sellers are not looking for a reason to accept a purchase contract — they are looking for a reason to reject it so they can focus on the few offers that fit the sellers’ criteria. Try not to give the seller any reason to reject your offer.
The Main Reason for a Preapproval Letter
A stack of 700 francs from French Polynesia sits on my desk. Primarily because I can’t throw them away, and I don’t know what else to do with them. They are pretty much worthless. People who exchange money for a living don’t want them because they are coins. If I were back in Bora Bora, these 7 coins might buy me two diet Cokes. But here? Nuttin’. Just like some home buyer who wants to write an offer without a preapproval letter — that kind of purchase offer would be worthless, like my pile of francs.
Yet, I know that home buyers struggle with the issue of obtaining a preapproval letter. Heck, even my neighbor doesn’t understand why she should get a preapproval letter. She says when she finds a home she wants to buy, she’ll get a letter. This is why she might not ever buy a house, though. Because by the time she finds something to buy, there will be a dozen other home buyers wanting to buy the same house, and no seller in this market will accept an offer without a preapproval letter to accompany that offer. So, my neighbor is at a huge disadvantage. She doesn’t want to hear about the market in Sacramento or how to buy a home in Sacramento. She has her own ideas about how it’s done, none of which are working out very well for her.
After all, she only buys a new home once every 30 years. We Sacramento real estate agents write offers for clients every week. Real estate is our business. We want to help our clients not hinder them.
This is a seller’s market in Sacramento. No inventory. Lots of buyers. This market is very tough for buyers. It’s more important now than ever to get a preapproval letter before buying a home. Not only does it tell you how much you qualify for, which doesn’t mean you have to go for the max, btw, but it assures the seller you have the means to close. It says you are serious and not some lookie-loo. Besides, sellers don’t accept offers without a preapproval letter. The preapproval letter is not for your agent. It’s for the seller.
The question might be where does one get a preapproval letter from? For starters, it should be from the lender where one intends to get a loan. Moreover, it should be from a lender who can perform. The two aren’t necessarily the same. Lots of home buyers want to go to their own bank or their own credit union to get a loan, and that’s probably the worst place to go. The reason is there is no guarantee that their own lender will perform. They all have access to the same bag of money, basically, but some lenders guarantee performance and some do not.
Why is performance important? Because a purchase contract is typically written for 30 days. That means the buyer must close escrow within 30 days of the seller’s acceptance or the contract expires. If your bank can’t close on time, the seller has the right to cancel. And you know what? With prices going up, sellers are canceling contracts that have expired. Yup! I’ve had it happen twice when representing the seller. The other agent’s buyers struggled to close because of this or that or some other thing and asked for an extension. Instead, my sellers canceled. The buyers had no say at that point. The contract time period had expired and it was within the seller’s rights to cancel. Do you want to lose your home because your lender can’t close on time?
You might want to ask your agent for a couple of recommendations. Real estate agents know which lenders perform because they work with those same lenders over and over. In case you’re thinking that agents get kickbacks or some other kind of incentive to recommend a lender, think again. That’s against the law. The only reason for an agent to recommend a mortgage broker or lender is performance. Period.
Why the Seller Didn’t Take Your Purchase Offer
Don’t give sellers a reason to reject your purchase offer. Not in a seller’s market like our present real estate market in Sacramento. Don’t give them one little reason. The thing that buyers don’t realize is when a listing agent is reviewing offers with the sellers, they are probably looking for a reason to reject. They are not looking for a reason to accept. That’s because most homes right now are attracting multiple buyers.
If you’re buying a home in Sacramento, you want to make your offer stand out but not in a bad way. You don’t want your purchase offer to be the only offer, for example, that asks the seller to give you the refrigerator. A smart buyer makes no demands on a seller. A smart buyer makes the offer easy for the seller to accept. This is not the time to ask the seller to pay for a home warranty or to demand that the seller in a Sacramento short sale, for instance, not send any other offers to the bank.
Realize that a Sacramento home buyer is not in a position to make demands today. Don’t stand out like a sore thumb.
For one thing, I don’t know of a single Sacramento short sale agent who would send more than one offer to the bank. It’s just not protocol. The only reason to ever do that is if the initial offer is too low. As long as a buyer’s offer is sufficient and would be acceptable to the short sale bank, only a short sale agent with sadistic tendencies would advise a seller to send more than one offer to the bank. It’s unwise to insert any clause apart from the norm that would make your purchase offer stand out in a negative way.
I promise you that if you offend the seller, your offer won’t stand a chance in a blue moon. If you’re not getting offers accepted, there might be a burr wedged in your offer somewhere.
Give the Seller Time to Accept Your Purchase Offer
When you’re buying a home in Sacramento — or anywhere else in California, for that matter — you should give the seller enough time to accept your purchase offer. This sounds like a simple concept, but it’s not. It’s more complicated than you might think. There are two things going on that affect the legality of your offer acceptance. You’ve got the time period in which the seller can accept your offer before it expires, and you’ve got the person to whom your offer needs to be delivered to be considered “in contract.”
You can easily lose a home over offer acceptance and offer delivery. In our California C.A.R. purchase contracts, this acceptance and delivery is discussed in paragraph 29. If an agent does not insert his or her name as the agent for delivery, the purchase contract is not considered delivered until the buyer receives the offer in his or her hands. If you want the deal to be done quickly — over and sealed — then the agent’s name should be noted in paragraph 29. But most important, give the seller enough time to accept the offer. Because anything can and does happen in real estate.
In the old days — the days of bellbottoms and stinky patchouli oil — agents used to write offers that expired “on presentation.” Sellers had all of 3 seconds to decide whether they wanted to accept an offer. There was no sleeping on it or I’ll get back to you. It was Take it or Leave it.
Today, we seem to be a much gentler bunch and, by default, our standard purchase contracts give sellers 3 days to ponder whether to accept, counter or ignore an offer. However, when those 3 days come and go, the purchase offer has expired. If you’re in the midst of buying a home in Sacramento, you don’t want your purchase offer to expire. Neither does the seller.
My sellers of a regular home (not a short sale) in the Sacramento area put that home on the market just before leaving for vacation. They figured this would give buyers plenty of time to view their home, without any inconvenience on the sellers’ end. The MLS comments to the buyer’s agents informed those agents that all offers would be reviewed on the day the sellers came home. That day is clearly noted in MLS.
So far, the first 5 offers will or have expired. We will be staring at expired offers when the sellers come home because the buyer’s agents did not give the sellers enough time to accept the purchase offer. Nobody read the MLS comments! If you’ve recently signed a purchase offer to buy a home in Sacramento and haven’t heard anything from your agent, read paragraph 29. Maybe your offer wasn’t rejected. Maybe it has expired.
