Or are you just submitting an offer? 

And do you know the difference??

Today we’ll talk about the basics of submitting an offer as compared to submitting the kind of offer  sellers love to accept – regardless of price.

Here are the 7 things your offer needs to include in order to give it the best possible chance:

So, what do you really NEED to submit an offer on a home for sale in the bay area?

  • Some sort of offer form.

That’s it.  And sometimes, not even that.

In the state of California, the only requirement for an offer is that it be in writing.  I’ve heard of legally binding contracts being drawn out on a napkin in a restaurant.  Does that mean that you should do that?  Unless you’re a billionaire tycoon, I would highly recommend that you don’t.

In the complicated maze of residential real estate paperwork, it is always advisable to have a Realtor (or at least some licensed professional) assist you with the offer.  If you are putting an offer together with a Realtor, here is the bare minimum you will likely do:

  1. Agency Disclosure & Market Conditions Advisory will need to be signed.
  2. Residential Purchase Agreement (One of the three different kinds of offer documents: CAR, PRDS, or SFAR depending on what your agent prefers.)
  3. Initial deposit of 1% of the offer price.
  4. No conversation with the listing agent.
  5. Your offer is emailed in once you sign it.

The reason that this is the bare minimum is that this is what’s required by law for an Agent to minimize their liability.

Just because your agent gets your signature on the offer docs will not automatically make it a good offer REGARDLESS OF PRICE.

So what makes a good offer?

  1. First, it is important for your agent to to get as much information as possible from the listing agent.  
    1. What is the seller looking for?  Is it all about the price, or is there anything else??  Quite often the price of the home isn’t the only concern a seller might have. 
      1. They might need a shorter escrow if they’re in a hurry or a longer escrow if they’re waiting on another transaction to close. 
      2. They might be looking to sell the home “As Is” because they don’t need any additional hassle
      3. Perhaps they’re looking for a lease-back for 30 – 60 days. 
      4. More often yet, they might really want to keep some appliance, or chandelier that’s a family heirloom.
    2. What is the listing agent looking for? 
      1. Which forms does the listing agent prefer and feel most comfortable with? (Much more important than what your agent prefers) 
      2. How thorough is the listing agent? (The more thorough they are, the more impactful your “good offer” will be).
      3. What kind of negotiation style does the agent have?  (This will help you determine how much you want to give to the seller right off the bat).
      4. What does the agent think is the most likely sales price of the home and what comparables did they use?
    3. And of course, aside from getting maximum information, the goal is to build rapport with the listing agent to assist with future negotiations.

  3. Your offer paperwork must be neat, well organized, and without mistakes.  
    1. All disclosures should be signed in advance, including all of the disclosures and reports provided by the seller (seller disclosures should be reviewed beforehand and signed).
    2. The correct offer paperwork must be filled out correctly, with no contradicting terms, dates, or conditions.
    3. All forms must be signed and dated as appropriate.
    4. The liquidated damages clause and arbitration clause should be initialed.
    5. All fees should be as customary in your area, but can be different depending on your offer strategy.
  4. If this is a regular sale, the offer must ALWAYS be accompanied by a minimum 3% initial deposit  to be taken seriously and cover liquidated damages.  This means 3% of your offer price.  Typically this is done by check, which will not be cashed until the offer is accepted.
  5. If you will be getting a loan, your offer should ALWAYS be accompanied by a letter of PRE-APPROVAL from your lender.  This is different than just a pre-qualification letter, and is only given once you submit your tax records and agree to having your credit pulled.
  6. Your offer should ALWAYS be accompanied by a “Proof of Funds“.  This is a simple printout of your latest bank statement (with the account numbers removed) to put the seller’s mind at ease that you do in fact have the necessary funds to put down.
  7. Your offer should be accompanied by a one-page letter about you and your family that puts a personal touch on the offer (especially useful if you’re offering less than what the seller wants).
  8. Your offer should be presented in person whenever possible to both the sellers and their agents by your Realtor so that they could gauge their response (through both words and body language). 
    1. Sometimes sellers don’t believe their own agent when they tell the sellers that their price is too high, and it takes a convincing presentation from the buyer’s agent with an explanation of the right comparables to get the point across. 
    2. If you simply email in the offer and get an email back with the counter offer, you’re missing out on a wealth of information that the sellers or their agent might have provided.

Once you have all of this information neatly assembled, you have the makings of a killer offer … and I haven’t even touched on the actual offer price 🙂

The beauty of having a nice, complete, and organized offer that caters to the seller’s needs is that it makes the sellers and the other agent WANT to work with you instead of the other buyers who just emailed in the offer on the wrong docs without addressing any of the seller’s concern (possibly without a pre-approval).  It shows the sellers that they’re getting a serious offer from serious buyers, with a Realtor that is thorough, has high attention to detail and will get the deal closed quickly and smoothly…. which is ultimately everything that the sellers are looking for.

Does the offer price itself matter?? Of course it does!!  But if you’re in a multiple offer situation on a home listed for $600K, and you submit a full, complete offer for $590K while someone else submits a “bare minimum”offer for $595K, I can almost guarantee you that the sellers won’t bother countering, but will simply accept your offer and avoid the headache.   Now imagine if you’re the only offer … how much money you can save.

I can tell you from experience that your biggest supporter will be the listing agent, who is looking to get the deal closed with least possible headache and will do all they can to sway the sellers to accept your offer.  I’ve had listing agents tell me time and time again, “Your offer wasn’t the highest, but I was dreading working with the other guy, so I really pushed for you.”

The good news for you as a buyer is that the difference between a “bare minimum” offer and a “good” offer, does not take any additional effort on your part.  It’s just a matter of choosing the right Realtor.

If you have any questions about offer paperwork, or are thinking of buying or selling a home in the bay area, CONTACT US today for a free consultation!