Letter of Offer vs Signed contract

[dupli]

I am having trouble working out what is best based on searching the forum, so I am after feedback.

When you are making an offer on a property do you give the REA a "Letter of offer" similar to the templates shown in other forum posts, or you just give the real estate agent a signed contract with your own clauses and details added?

This post is a logical extension on the discussion of verbal vs written offers:
http://www.somersoft.com/forums/showthread.php?t=15516

 

[wobbycarly]

In Vic, I've always come to a verbal agreement with the vendor (via the REA) then THAT gets written into the contract which is counter signed.

In Qld, you sign an offer, then the vendor crosses our your price and writes in their's, then you cross that out and write in a counter, etc, etc, until everyone's happy.

 

[Frizzle]

In Qld, you sign an offer, then the vendor crosses our your price and writes in their's, then you cross that out and write in a counter, etc, etc, until everyone's happy.

I guess there will be variations within each state. Out our way (Qld), we generally find that verbal negotiations are done between the parties until an agreed price is reached, and then the paperwork is formalised.
The crossing out, back and forth certainly can result in a mighty messy document.
Frizzle

 

[wobbycarly]

I guess there will be variations within each state. Out our way (Qld), we generally find that verbal negotiations are done between the parties until an agreed price is reached, and then the paperwork is formalised.
The crossing out, back and forth certainly can result in a mighty messy document.
Frizzle

Verrry messy, but this is how it went (via fax, no less) last July!

 

[Player]

No contract.......no deal

I ensure that I have crossed my tee's and dotted my iii's with my diligence to reach a point that I can confidently put an offer in writing in the form of a contract. Verbal ping pong and letters of offers leave too much scope for gazzumping.

In Victoria at least, a contract is in my experience the strongest proposition and if there is crossing out and amended prices terms, then I prefer it is on a contract despite the mess. I only ever give the vendor several hours (same day) to accept or reject or my offer lapses. Unless there are unforseen distance (remoteness) issues and I have sussed out the vendor's availability to make a decision with the rea, I rarely give an overnight curfew.

Too much time allows the rea to play your offer up to other interested parties......or create fictitious interest By offering a short timed offer in writing on the contract you are putting your best foot forward and showing your inent to purchase. You can still have subject to clauses in Vic.

The intricacies for each state are of course different. To my mind however there is no deal until that contract is countersigned no matter what verbal assurances or letters provide.

Also when (in the event you are successful) the rea congratulates you by phone that you've secured the property, ask for the countersigned page of the contract to be faxed to you (or if logistics allow, pick it up from the rea) and reconcile the signature(s) with that/those on the Sec 32 (in VIC). There is no contract until everyone has signed regardless of what verbal advice is given.

Trust very sporadically and reserve the right to verify everything to protect your interests.

 

[VYBerlinaV8]

My approach is to do this verbally, but with a twist...

If I'm serious about buying a property, I ask the agent to show me the property before the first open house, on the basis that I will make an offer. I tell the agent to let the owner know I will be making an offer, so they tend to wait by the phone. Then, I have a look at the property, and make the offer, and ask the agent to call the owner while I'm waiting there. Pressure on seller has often equaled sale.

That said, I don't bother going through all this unless I'm actually ready to buy, and believe that the property, provided it meets my (realistic) expectations, is what I'm after.

I've bought several properties this way now.

 

[jaycee]

My approach is to do this verbally, but with a twist...

If I'm serious about buying a property, I ask the agent to show me the property before the first open house, on the basis that I will make an offer. I tell the agent to let the owner know I will be making an offer, so they tend to wait by the phone. Then, I have a look at the property, and make the offer, and ask the agent to call the owner while I'm waiting there. Pressure on seller has often equaled sale.

That said, I don't bother going through all this unless I'm actually ready to buy, and believe that the property, provided it meets my (realistic) expectations, is what I'm after.

I've bought several properties this way now.

How do you MAKE YOUR OFFER ?

ring the REA and offertell them Im willing to buy it for $x ?

I aske dthe REA at a home open if I wnated to discuss an makling an offer, woudl I call you, she said yes, call me if you wnat to look at it agin or make offer etc no problem. and went back to the ther other 2 potential buyers

 

[kathryn d]

Each of our purchases have been slightly different.
Whenever possible we write up the offer,with all of conditions slanted in our favor of course.
More and more purchases have not even involved a REA.

The times we have been required to deal with a REA we give them 24-48 hrs to accept or counter.We generally know where they will counter at.It's usually in the middle of the asking price and our offer.

I like the private deals the best.We generally pay full asking price, but get the conditions we are after.

The last purchase started with us sending them an email, they followed up with a phone call. We outlined again an email. We agreed and had our lawyer draw up the contracts.

 

[VYBerlinaV8]

How do you MAKE YOUR OFFER ?

ring the REA and offertell them Im willing to buy it for $x ?

I aske dthe REA at a home open if I wnated to discuss an makling an offer, woudl I call you, she said yes, call me if you wnat to look at it agin or make offer etc no problem. and went back to the ther other 2 potential buyers

What I do is this:
1) Get the agent to open the house (with only me viewing it), and show me around.
2) While looking around, form up an opinion as to the figure I'll pay, and start talking to the agent about price (this gets them excited about an easy sale)
3) Before we go outside, simply say to the agent "OK, how about you call the seller now and tell them I've offered $X". I usually start a little below my final offer, but only by a few thousand bucks. I want the agent to think I'm serious, but time poor, and so won't wait around for a lengthy negotiation.
4) Wait while the seller makes the call - this typically results in a response of "they'd like $X more". If that figure is within what I'm willing to pay, I'll say "great - sold, let's go write up the sales order now", or "my best offer is $Y, above that I'm not interested".
5) Most of the time this works, because the agent pressures the seller to sell. If we're within shouting distance of the asking price, it works well.

The last place I bought I offered quite a bit lower than asking (I thought it was overpriced), and we went backward and forward over a couple of days, but at least I was the only buyer involved.

But making the offer has always been verbal. I've never made a written offer.

 

[jaycee]

Thanks VY, very interesting read - soudns like a good wya to go, will refere to this again.

 

[VYBerlinaV8]

Thanks VY, very interesting read - soudns like a good wya to go, will refere to this again.

If you can use it, please do. It has worked well for me in the past. If you do use this approach, let us know how it goes. Cheers.

 

[jaycee]

I got a phone call back during lunch time yesterday form the agent

She received my fax but was out at appointments ealier. At firs tthoughts she thinks my offer is a little low and therf9ore, the owenr woudl problaby counter it.

she suggeted that she is throwing somenone else through for a 2nd inspection this evening and offeredc to come out and wirte up the offer with me. She mentioned $280 as osmethign he would probably take

She was too busy to do it yesteday, suggeted today. I said fax me the paperwork, but apparently that is too hard - I need to get my signature witnessed (sigh, what's taht got to do with faxing a pecie of paper)

So she wants to come out ot my work today and writ eup the offer - I said pressent the curent offe to Jeremty so that we know wha he is thinking, no point in worting up an offer he will automatically reject is there, as you ahve it in writing already (my offer) ?

She rang back last night (msgebank) saying she presented to the vendor, who said he is keen to sget clsoer to the asking price and would like to see what happens at fruther inspections

hmmmmm this is where I don't get it. Whatever I offer today, the agent will just use it to get a higher offer off the other buyer she opens it up for tonight, even if I sign an offer of $280k

 

[kathryn d]

Jaycee,
You need to control this situation.Don't offer any information to the REA about how much you want to spend. They are not working for you.

In Aus they may do things a bit different.,..but , so what.
Have the REA write up your offer.
It is up to the the Vendor accept, reject or counter.

Of course they are going to reject the offer now. You have already indicated you will pay more.

Good luck

 

[jaycee]

Well offered nothing and as the agent did not contact me today despite saying she would

 

[jaycee]

Jaycee,
You need to control this situation.Don't offer any information to the REA about how much you want to spend. They are not working for you.

In Aus they may do things a bit different.,..but , so what.
Have the REA write up your offer.
It is up to the the Vendor accept, reject or counter.

Of course they are going to reject the offer now. You have already indicated you will pay more.

Good luck

take the phone call after sending the agent a written offer - how is taht diffent ot wha tyou said ? She offered to come out &^ write the offer up I said sure let's do it, but she wouldn't do it till today, with an other buyer lookin gthis evenining, my offer won't be worth anything if they are more keen to pay more than I am, it will jsut help her sell for a higher price.

what exactly could I have done differently on the phone which is the first oppty I had to speak to her, sounds like you're tellling me I've done the "wrong thing" for lack of a better term, without telling me what the right thing would have been...

 

[kathryn d]

take the phone call after sending the agent a written offer - how is taht diffent ot wha tyou said ? She offered to come out &^ write the offer up I said sure let's do it, but she wouldn't do it till today, with an other buyer lookin gthis evenining, my offer won't be worth anything if they are more keen to pay more than I am, it will jsut help her sell for a higher price.

what exactly could I have done differently on the phone which is the first oppty I had to speak to her, sounds like you're tellling me I've done the "wrong thing" for lack of a better term, without telling me what the right thing would have been...

Jaycee,
Not sure how you can back paddle now.
For future reference, never tell the REA you will "try this offer". They don't work for you.

IMO the best you can do now is give the REA as little info of your strategy as possible. Give the impression you are starting to look elsewhere..(ask what else they can show you)Tell them you want your offer presented, regardless of any other offer.

The price is not always the deciding factor.Are you able to offer a closing to what the Vendor is looking for.Is yours conditional on financing?
Don't be throwing large sums of deposit money to "show you are serious". If something goes wrong..you will lose that money.

 

[Bargain Hunter]

We always make verbal offers and include a time for the vendor to respond. Once the terms are agreed we sign a contract ASAP.

 

[jaycee]

oh well under offer no

better luck next time

 

[mm987]

With my dealings in real estate I have found when the agent encourages you to put your offer forward in the way of a Letter of offer he feels that it is too low and is using it more as a feedback letter to the seller . When I put my offers forward with agents and they have recommended to put them forward in the way of contracts I no my offer stands a better chance.