Category Archives: customized offer

Most Offers Aren’t Rejected…they’re just unacceptable as written.

You’re never competing with multiple offers… I’ll pause while you ponder that.

When an owner has a dozen offers on the table, more often than not, they have one offer that’s acceptable as written. Even if a few of the offers have exceptional prices, at best, one offer is acceptable without requiring changes. Most offers can’t be accepted without a counter offer. Those offers aren’t necessarily rejected, they’re simply unacceptable. You don’t have to compete with unacceptable offers. As a listing agent, it’s sad to see a person lose the opportunity to own a house when, except for flaws, and poorly drafted terms, their offer was the better choice.

Contract Drafting Skills are essential in this market. They’re also not a high priority subject of education. That’s too bad. Many years ago I decided I would make sure I was never at a disadvantage to anyone…broker or lawyer, in my knowledge of the Wisconsin purchase agreements and forms. I’m not saying I know the law better; I’m saying I know what’s in the purchase agreements, what’s not, what works for clients, and what works against clients.

Acceptable Offers are easier to craft than the ones that are peppered with errors and omissions. All of my clients can’t outbid the highest bidders. But none of my clients are submitting unacceptable offers because I missed something, or they weren’t given proper choices. Rejection is a fact of life. Acceptance is the goal. Submitting offers that can’t be accepted is avoidable.

Years of experience and ability do not go hand in hand. Some REALTORS get into the field because they like houses, or like working with people. Few people are inspired to get a real estate license because they love contract work. When you’re interviewing agents to represent you, take some time to discover their contract drafting ability and comfort. If you have a choice, expect higher standards.

Submit Your Best and Final Offer…the first time.

“I hope the offer is written well enough to get my buyer’s the home that they very much like.”

The agent who made this statement takes responsibility for the outcome. Their client is in good hands. We like to think about the buyer’s ability, the state of the market, or the field’s unfairness as the reasons our client didn’t get the accepted offer. When you take that thought to the next logical step, aren’t you saying you and your ability are not essential to success? Are you sure you want to admit you’re along for the ride, and your skill is overrated? I don’t think we want to say that. 

I once thought that way. I was a highly effective buyer agent in a buyer favorable market. A lot of people were. When the market turned to favor the seller, more offers returned as rejected than accepted.  Eventually, I became motivated to find a solution I could control to give my clients a chance. By learning the purchase agreement and the contingencies we agents add to our clients’ offers, I discovered the owner’s decision to accept or reject my offers was already determined when I handed it to the listing agent. The skill I developed was shared with agents I worked with as far back as 2014. From time to time, I see their offers come in on homes I have for sale. Everyone is not going to hire me as their buyer agent, I know that. I’m glad to see people benefit from the work other agents did to learn and apply the skills they learned.

Awareness and Acceptance. Before we can stop doing stupid, it helps to become aware of our part in the outcome. When we then accept our responsibility, we become open to change things that don’t work. Get to here, and the change will come from learning. To learn, we can’t just accept the opinions of other people. Knowledge happens to those who participate in the process of challenging beliefs, their own, and those of others. 

Please Submit Your Best and Final Offer. If you get this message after you’ve submitted an offer, you are playing with fire if you expect a counteroffer will come or if you doubt that the seller has a strong position. What do you do if you are lucky enough to get this message before the house goes to someone other than your client? A better question is, what can you do to make sure your client has submitted their best offer the first time? If you don’t know how to craft a better offer or guide your client through their options to write their best offer the first time, you’re not going to be able to do any better with a lucky second chance. 

Your Best and Final Offer. A learning experience for buyer agents. In February, I will introduce an online learning opportunity for agents who aren’t going to wait for the market or their clients to get better. If you can read a real estate contract, you can learn my method other agents are using to win the accepted offer. I promise, if you develop this skill, you will never again depend on your client’s ability to outbid everyone on the price to win the accepted offer. Let me know if improving your ability to affect the decision to take your client’s offer is for you. 

Fear No One. DIY Real Estate.

Know what to look for. Know what you want. Negotiate success by knowing what the contract says.

Fear is a great motivator. Marketing experts quickly turn to fear messages to drive customers toward their business. Maybe this is a first choice option when a business owner knows their offering isn’t appealing enough to attract customers. Even if fear messages inspire some people to rush to be saved, what’s the net effect of fear messaging on a business?

The real estate industry has a long history of banking their business on fear marketing. Analytics are readily available to measure the consequences of any marketing message, and I wonder what the evidence shows about the impact of inspiring people by fear? Without a study, I’m going to believe short term favorable results do not equal long term consequences in the same way that crying wolf, “FIRE!” in a crowded theater causes suspicion, not action, as a first response in the future.

When a real estate business warns consumers that they see a world of risk of loss, dangerous consequences, and potential for peril in a real estate sale, I’m not going to disagree with them. People who see opportunity as risk probably do so for a reason—they’re well versed in causing complications in a transaction. It’s entirely possible a real estate transaction is risky in the hands of the fear monger.

Through the efforts of the State of Wisconsin, attorneys, bankers, and REALTORS, standard real estate contracts are designed to make sales in Wisconsin relatively simple, and fairly safe for residents. As the years go by more good and not-so-good ideas become part of the real estate contract and the document balloons to nine pages, and then to 11, or 13, or 21.

Trigonometry, rocket science, brain surgery and statistics are complicated for those who don’t know what the scientists know. For those who commit themselves to the practice of science and math solutions to the problems come quickly.

Real estate is not rocket science. But it’s also not point and click, check this box, not that one, fill in this blank with this, and that one with that. With a logical understanding of the pre-written provisions of contracts it’s easy to develop a base of competence to confidently negotiate safe and sound terms regardless of who’s on the other side.

With confidence in place of fear, fewer errors are made, fewer chances are taken, and expectations remain reasonable. No promises you’ll net more money or buy a home at a discount. But I do promise your opportunity for peace and happiness without fear increases dramatically by knowing a little more than the folks on the other side.

I believe better transactions are better for our industry. I’m not offering free market price opinions. Anyone can do that. But I will meet with you to help you learn what the contract says. No charge. The payback is in the long term.

Ask WHY

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.

 

 

Olive Branch Inspection Contingency

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.

My fears or yours?

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.

Business Partner or Friend.

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.

Mass Produced Offer Documents Cost Home Buyers Thousands of Dollars.

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

Pleading Letters Move No One to Acceptance v. Safe Offer Terms

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.