Maybe July 2019, maybe not, we will see the new WB 11 Residential Offer to Purchase replace the version we’ve used since 2011. We know for sure it will be bigger than the present nine page document. Better? We can hope.
As time goes by and workarounds become common practice, firms create contingencies on their own addenda to counter the efforts of the miscreant. And then it gets interesting. One firm after another sees something you wrote as useful, copies it, or modifies it and makes the condition their own. By the time the condition has spread through the community of REALTORS multiple versions of the original idea are incorporated into addenda. What looks like another firm’s contingency rarely is exactly alike. The slightest word, “shall or may” for example, will significantly change the power of a contingency in favor of one party.
Eventually the WRA and REEB sit down to modify the WB to comply with current law, and common practice. It seems like every idea ever created to prevent the least common occurrence gets to audition for a place in the new Offer. Not all get accepted but enough do that the document that went in comes out much fatter. Why the document doesn’t come out smaller is because users won’t let go of what they know. Regardless of its uncommon use (Seller right to provide financing when financing denied) wordy terms take up space in 100% of the Offers so that it will be there the .01% of the time it’s used. Asking “WHY is this or that contingency necessary?” would result in the WB coming in at no more pages than the one we have and probably even smaller.
The analytics exist to know if contingencies we need are being left out to allow contingencies we don’t use to live on. Before the next WB goes into use, it might be worth having it analyzed. And if the old shoes don’t get used, we could toss them for good.
Given a choice, without being told of potential consequences, a Buyer Client is 99% likely to include a Buyer Favorable leverage an inspection contingency, over the one on page 9 of the Offer to Purchase. The people who created the Inspection Contingency in the Offer intentionally tilted the advantage to the Seller. Obviously the Seller has more to risk in negotiations after acceptance. The party with the most on the line should have a reasonable opportunity to cure defects, and keep a transaction together when unexpected conditions are identified. During the Buyer Market run we had in and after the recession, more Firms began using a Buyer Favorable Inspection Contingency as standard practice. Sellers had no choice but to allow the Buyer to have the leverage which was intended for them. That happens when the market changes.
Well, the market changed again. Licensees stuck in the new habit of using a company crafted Buyer Leverage Inspection contingency gave no thought to the consequences to their clients and went right on checking the box without discussing the difference between that contingency and the one on page 9 of the Offer. Sellers and listing agents were quick to identify the high risk condition of the Buyer Favorable contingency. For no reason other than risk, Sellers will reject Offers which give the inspection advantage to the Buyer. It’s a shame when a person loses a house because they weren’t given a chance to make their offer more attractive to the Seller by simply being kinder, gentler, and safe.
Knowing the difference between a Heavy Hand and an Oliver Branch allows the licensee to give the client a real opportunity. It’s a magical thing watching a licensee earn the confidence of clients when they explain choices and think through a choice with clients.
Become a part of the conversation, a part of the thinking process by learning to find the trips and traps of contingencies. Some people will always do as they always have because that’s the way they learned it. But those people will never have the results they could have by learning why something is as it is, and learning how to make the contingencies work for their client. And by working for their client I don’t mean wrapping them in unnecessary protections.
I’m afraid of clowns, dolls that blink, high places with low railings, and overpaying a lot. If you don’t share my fears you don’t need me to protect you from what frightens me. Knowing where your courage begins allows me to customize an Offer to Purchase for you, and a customized Offer where courage not fear is expressed is more acceptable to home sellers.
The Wisconsin WB Offer to Purchase documents and much of what’s in the addenda of private firms is created to be buyer-consumer safe. Inspired by intent to avoid risk (things other people fear) for inexperienced real estate buyers, the creators of these documents inadvertently created form which makes all buyers appear to be standard with common fears, reservations, and reluctance. A customized Offer to Purchase separates you from the rest by showing the Seller you are more committed, fearless, prepared, able, and reasonable.
There are at least 20 ideas to improve your Offer to capture the Seller’s attention in this competitive Seller’s market. Being afraid is OK. Being protected from other people’s fears is a choice. Expect the expert to inform and offer ideas to show your courage, instead of their fears.
Selling your real estate is somewhat like seeking a short term business partner. The same attributes you want to see in a business partner: courageous, able, prepared, committed, are what you want in buyer partner. So it makes sense that red flags indicating fear, unprepared, uncertain, marginal ability, and lack luster commitment would cause hesitation. Both people could be very good friends, but only one is likely to be a responsible business partner.
What do the terms of your Offer to Purchase tell the Seller about you? Potential partner or friend? Customize your offer. The business partner would.
You can have any color car you want, as long as you want black. The Model T was built efficiently in mass production assembly line factories, for anyone who wanted to get from here to there on their own schedule without depending on a horse. The mass production model groups everyone into the same box. By standardization, the producers have control, and the product is reliably consistent, even if it’s not reliably effective.
The residential offer to purchase documents (including firm crafted addenda) are inefficient, unreliable, products costing the American home buyers billions of dollars annually. Real estate values are pushed up and beyond the reach of a large segment of the population because these documents reduce even the most attractive buyer to ordinary. When critical terms of the Offer are equal on paper, the only difference maker in the eyes of a home seller is PRICE.
Smart Realtors know how to customize an Offer for their buyer-clients, to make the document work to their advantage while giving the owner all of the security they desire at a price they are willing to accept. A customized Offer tells the owner everything they want to know about the buyer’s commitment, ability, reliability to make a decision to commit to sell to them. Oh, sure some people want to know about families, career, where you’re from, what you look like, how much you love their decorating, but they won’t make a commitment to take unreasonable risk because of your personal story.
Customized Offers are the solution to rejection. Customized offers don’t cost you anything. In fact, they are more efficient, more powerful, more fair, more acceptable, and can be the difference in thousands of dollars in the price you pay to own your first choice home. 60 Seconds to a Customized Offer
Three people made offers on the same house. Two offers included well written, emotion inducing letters with photographs of the married man and woman, complete with details of their employment, education, professional credentials, and community involvement in causes for good. Both expressed their love for the property and their awareness of the owner’s own remarkable traits. Each of these offers included double digit items (14 and 17) an owner would counter to make the offer safe enough for the owner to commit to. Two of the three offers were for prices the owner would accept.
One offer was for the most money, and represented less risk than the other two. However, it included two ambiguous contingencies, and one exit clause the buyer could exercise six days prior to closing. The open exit door and ambiguity were reasons for the seller to question the buyer’s commitment.
Had any of the offers been written with terms proving the buyer’s no-reservation commitment to closing, or at least left no exit doors open, their offer would have been accepted. The letters induced an emotional response. The emotional response did not cause a compelling response to accept one offer or negotiate with any one person.
Had as much attention been given to writing a customized, seller-safe offer, any one of these couples could have had their offer accepted. And, unfortunately, two of the couples and two of the licensees may think their letters helped their cause.
Buyers are improving their skill in writing fiction. They’re getting professional help on-line. Be the licensee who improves her skill in customizing, seller-safe offers to match the commitment of the buyer. The pleading letter is no match for customized offers.