Got Clout
Gilbert L. Johnston
Copyright © 2011 by Gilbert L. Johnston
All rights reserved.
Published in the United States of America
No part of this book may be copied in any format, electronic or otherwise, without the express written permission of the author.
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Table of Contents
Chapter
1
Chapter
2
Chapter
3
Chapter
4
Chapter
5
Chapter
6
Chapter
7
Chapter
8
Chapter
9
Chapter
10
Chapter
11
Chapter
12
Chapter
13
Chapter
14
Chapter
15
Chapter
16
Chapter
17
Chapter
18
Chapter
19
It’s
Time to Put a Tiger in Your Corner.
Expect Changes; they are
inevitable.
Engaging in the current real estate marketing scheme promoted by typical industry favorites is like playing a game of chess. Buyers are the “pawns.” Sellers are the “kings”, The “queens” are the typical real estate moguls dictating how the game is going to be played.
In that game, competition has always been fierce; agents scramble to see who can outbid their competitions property valuations for the right to list the sellers’ property. It was a system doomed to fail. The economic misfortunes in the housing market we see today reflect that failure; it could easily have been predicted.
Tired of being the pawn? It’s time to change the rules of the game under which you would prefer to play. It’s your money, after all. It’s fair-play time for buyers! Buyers get to call the shots for a change.
New rules for buyers comes with tigers in their corners. We call these tigers: Exclusive Buyer’s Brokers. They trump the pawn brokers every day. (Excuse the pun; it was intended.)
If you want to get a tiger into your corner, you’ve picked the right book, at the right time. The acquisition of knowledge is where this game is headed. Learn the rules of the game. Get with it, or get left behind.
Dramatic Savings are headed your way! You can save thousands of dollars on your next real estate transaction. And, why not? Simply absorbing the wealth of information in this book is your first step. It’s the key to your coming out on-top of the game in any acquisition. It can also put some unanticipated rewards into your pockets; that’s virtually guaranteed.
Let’s do an analogy: Learning how to ski has similar aspects. Would you venture out on the ski slopes without having been trained how to use your skis, or how to maneuver on the slopes? Of course, you wouldn’t; although some have been known to try. A few were successful in spite of the odds.
However, you may be better off not challenging the odds. Unless experienced, becoming involved in the purchase of any real estate can be risky business. With the knowledge gained in this book and with the services of a highly qualified exclusive buyer’s broker, your risks will be greatly diminished.
Knowledge and technology are what it’s all about. This book provides the knowledge you may need. We will introduce you to the technology with our recommendations for your exclusive buyer’s broker. You will have a very competent instructor, your broker. You can count on it. Following the guidelines provided here will put you in the driver’s seat in any transaction.
However, there is a key ingredient to your success; an entrepreneurial spirit is essential. Warren Buffet said it: “We need innovation to get America moving again.”That’s where this book begins.
Warren Buffet wasn’t the only prominent figure who has commented about the entrepreneurial spirit that’s needed. Donald Trump reportedly expressed that sentiment more succinctly, comparing it to a football coach talking to his players: “It’s time to kick butt!”
Although, “butt” may not be the precise word he used; we will let your use your own imagination. Can you imagine where our economy would be today if we had all taken that attitude seriously some time ago?
You can begin your innovative thinking with the next real estate purchase, or the next mortgage transaction you may undertake. Getting a good handle on the guidelines spelled out in this book would be a good place to start. You can’t get much more innovative than to adopt the program recommended here. Discover the clout that comes with that attitude and this book.
Stand back and watch your spirits soar while your pocketbook and savings accounts become fatter!
Are We Shaking-up the Traditional Real Estate Industry?
That’s certainly a good place to start: the traditional real estate marketing system is close to being broken. It has been stuck in first gear far too long. Just listen to the cries when agents proclaim, “We’ve always done it this way!” That’s the problem.
This book and the program promoted here are a consequence of the challenges facing the industry and the nation. We think the majority of agents will prove that they are up to the challenge. The buyers will love it!
There have been some innovations in the industry in the past, but we believe they weren’t moving in the right direction. Many firms embracing those familiar policies focused on listing properties. That fostered a race among agents to promote the highest prices for sellers. That merely emphasized that those quoting the highest prices usually got the listings.
No wonder the insane ensuing race for escalating prices helped bring about the collapse of the market. The system of placing arbitrarily high valuations on properties, usually merely to out-guess their competition, eventually crumbled. The markets went with it.
Today’s market demands that, rather than reducing fees for the seller, let’s put the emphasis where it really belongs: providing incentives for the buyers. In prior years, buyers rarely benefited. Our focus should be on meeting the buyer’s needs; getting the best deal, saving the most money for our buyers, is where that focus should lie.
Many firms that promised the highest valuations and the lowest listing fees to sellers have gone out of business, a result of the downturn in the market. The mortgage crisis and the economic conditions that followed could have been predicted. A semblance of sanity is slowly returning to the industry, even if abruptly so in many instances.
Providing incentives for sellers doesn’t cut it any longer. The purchasers are riding the crest of that wave today. In a fiercely competitive market, with lots of properties on the market, that’s where it belongs. That’s where Got Clout? enters the picture.
Who’s Looking-out for the Buyer’s Interests?
Many of the large real estate sales firms still operate on a boiler-room theory: hire many agents and some are bound to come up with a sale now and then. Those agents would likely scream if you were to suggest that maybe they should use some innovative ways to attract and benefit more buyers.
Buyers “Got Clout!” They are the innovators with an entrepreneurial spirit that should be driving the market. Following the principles described in the book can potentially profit the buyers handsomely; it may even bring more business to that broker’s doors.
Ignoring these admonitions may not only be foolish for a buyer, it may mark that buyer as just another “pawn.”
What’s the Next Step?
Sooner or later, our readers will be looking toward buying a home, or other real estate, even if it’s the second time around for them. The inherent drive to own you own home is universal. The old adage holds true: “When it comes to land, they aren’t making any more of it. Get yours while you can!”
This book confirms the concept that knowledge is king in this world. It enables our buyers to negotiate with confidence; the best possible outcome is at stake in your real estate ventures.
Whether a first-time buyer or a veteran with one or more purchases under your belt, this book will take you there. The program advocated here provides a number of advantages over the traditional real estate acquisition process. There are numerous options for our readers. Pick and choose from those that interest you, or choose all of them. It’s your move:
(1) Financial benefits for our buyer on any real estate transaction.
(2) An education in becoming a knowledgeable buyer of any real estate, including investors purchasing for future rewards. This education can bring you a lifetime of benefits;
(3) Some unique ways of acquiring property that will not only save you a bundle, but which may also put another bundle in your pocket;
(4) Opportunities to gain considerable knowledge – as much or more than any real estate agent you may encounter.
We can show you how to put that knowledge to work for your benefit without having to become a licensed real estate agent and without having to commit to spending a lot of your hard-earned money;
(5) Additional opportunities to turn the knowledge you will gain into more welcome incentives.
The latter are all strictly optional and require no real estate license. You can explore them, learn more about them and possibly exercise that knowledge for your benefit. Or totally ignore them if you decide that’s not your “bag.”
(6) Alternatives to purchasing a home.
These will not only save you a lot of money but may actually put additional cash in your pocket. Use these for your own home purchase or for investments in real estate, which can pay off handsomely – all without having to buy any property or to pay expensive closing costs. (See Chapter Nine.)
The Exclusive Buyers Broker
This concept is extremely important to understanding everything you will learn in this book. The Exclusive Buyer’s Broker (Agent, representative, etc.) is the preferred and most highly recommended form of agency in the industry. There are many benefits that go with this kind of representation. Your broker may very well be one of them, if you follow these guidelines. That broker becomes very heavily involved in obtaining the best possible results for his or her buyers.
This book teaches certain concepts, some new and some more traditional. It will teach you everything you will need to know prior to your exercising any of these options and benefits.
However, we must first alert you to the following disclaimer:
You will be gaining information that typical real estate agents would prefer you didn’t know. When they have discovered that you have read this book, you may not receive the best reception from them.
The brokers who will represent our clients are Exclusive Buyers Brokers (agents, representatives, etc.) They will expend a great deal of time and energy on your behalf in this form of representation.
Therefore, some of them may require a formal agreement between the broker and his prospective buyer prior to the broker commencing any endeavors on his or her behalf. This is common procedure with virtually all Exclusive Buyer’s Representatives. This contract may be summarized as follows:
The Contract
1. The relationship between an Exclusive Buyer’s Broker and the client may be considered, in some respects, like a partnership. Each has tasks to perform and each assists the other in fulfilling those tasks. The comparison ends there, however. In no sense of the word is it treated as a legally binding partnership.
2. Under this unique program, the broker sponsors contributions to the buyer’s costs. The contributions come from the broker’s commission earnings. Typically, the broker may contribute, for example, perhaps 50 percent of his commission, although that is always subject to negotiations between the broker and the buyer.
3. The broker will also negotiate concessions from the seller that may provide very substantial rewards to the buyer. The broker will also benefit from the negotiations. That’s why there will be such great incentives for your broker to do so. No other real estate program of which we have become aware offers this option to the buyers.
Concessions from the seller are always in addition to any financial incentives derived from governmental origins, or other incentives that may stem from public agencies or from lending sources. On the buyer’s behalf, the broker will faithfully pursue all of these incentives with no fees charged to the buyer.
The broker in the latter case is rewarded with a commission paid by the buyer for each concession from the seller that he or she generates, in excess of $1,000. Thus, the broker is highly motivated to get as many concessions as possible. That’s a huge plus for the buyer, as well as the broker!
4. Generally, the purchaser assumes the obligation to find, arrange for tours, and to choose the properties in which he or she is interested in purchasing. The broker assists the purchaser, of course, in all of such tasks and will arrange the showing to his client.
5. Your broker wants serious buyers only. He doesn’t want to spend his time running all over the country looking for possible properties in which you may or may not be interested. Consequently, he’s willing to share his commission with you. On the other hand, the buyer must accept some responsibilities in order for the broker to do that.
6. The broker writes the Purchase Offer, along with any counter offers, as directed by his purchaser, in the event the seller counters the offer.
7. The broker is responsible for seeing that the final agreed-upon transaction documents make their way to the escrow phase for closing. But that doesn’t end the broker’s job. He continues to consult with his buyer and monitor the status of the closing.
The major difference between this transaction and that done through most real estate agencies is that the broker’s loyalty is always strictly to his client. He has no obligation to the seller, the seller’s agent. He has no obligation to the listing agency. Consequently, our broker can encourage the requesting of sizable concessions from the seller, such as a contributing to the buyer’s closing costs. Getting the seller to make concessions to the buyer is our broker’s specialty.
Typical real estate firms would usually not be the least bit interested in negotiating concessions from their seller. That’s where an Exclusive Buyer’s Broker earns his keep.
That’s the essence of Got Clout? It’s almost like a “partnership” between the buyer and his broker. The broker doesn’t, however, take his license lightly. He is fully responsible for all phases of the transaction, as required by the states licensing authority, the Department of Real Estate in California.
Chapter One
Choosing and Viewing Potential
Properties
This phase is of utmost importance. Your broker will lay out guidelines as to what type of home or other property you are interested in viewing in those areas of greatest interest, if you know that at this time.
Together, you and your broker will be able to define the type of property of greatest interest to you and those factors which concern you the most. You may decide what’s really important, what’s most desirable and what may just be a nice option, if available.
Your broker may suggest reviewing some listings on the computer in his office, or he might have you review them in your home, at your convenience. You will find most listings available on the Internet, and that may save a great deal of time ln searching for properties.
You will also specify the areas, if that’s known at the time, in which you would like to find a home. Your Buyer’s Exclusive Agent will seek to fulfill your needs and wants. You will undoubtedly know what size home, how many bedrooms and bathrooms, etc. will meet your criteria.
He/she can print out a list of available properties that would most likely meet such criteria. They can then be viewed online initially, with follow-up visits to the properties at an appropriate time for you. You should be able to narrow your list of choices that you will likely want to view in person.
Note: From this point forward in this book, we will likely refer to all agents as “broker” or as “agent” for the purpose of simplification. Such terms will be gender neutral.
Buyers Choose the Homes They Wish to See
While driving around in areas of interest, you may see a property that looks promising. If there is a real estate sign posted, jot down some notes, such as the real estate company whose sign is posted, the agent listed on the sign, the address of the property, and, of importance, the listing agent’s telephone number. Call your broker to let him know what you have discovered, if you want to pursue it further.
A box will perhaps be near the real estate sign that contains a flier and a great deal of information regarding the property. That’s even better! No need to take a lot of notes.
If it’s an open house, by all means don’t hesitate to take the tour with any agent who may be there; it will undoubtedly be the listing agent. They want to sell their listings, so they will welcome you. You may want to mention that you have your own broker. They will respect this and will probably offer you a copy of their listing(s) for you to show and discuss with your broker.
Be forewarned! Many agents are aggressively seeking buyers, especially those who are unattended by a broker. Be polite. Don’t hesitate to show them your broker’s card if they get overly aggressive. That will usually cool them off.
But don’t be put off by the aggressive demeanor. It’s normal in the real estate industry. You will learn how to handle any real estate agent who you may encounter. You will find this book is an essential part of the teaching process involved in your becoming a “real estate savvy” buyer.
The market, in general, has always been fiercely competitive. Most agents will go after any unattended potential client, whenever possible. Without your broker being present, most agents will do whatever they can to latch onto you as “their” client.
You may want to advise aggressive agents that you are under contract with an Exclusive Buyer’s Broker. That will certainly cool them off. The agreement with your broker provides all sorts of benefits that most agents would be unlikely to match.
It’s perfectly ok to view any property with any agent. However, you may not want to mention to any agent you encounter that you have read the book.
Some agents may become uncooperative if you let on that you have read this book. Even if you were to ask an innocent question, they may turn a deaf ear in your direction. Most agents, however, will treat you with respect.
In many instances, you may be viewing the properties with the listing agent at your side. If it’s an “Open House” event, such agents want to sell their listings. They will more than likely greet you with open arms, even after you have advised them that you have your own broker.
However, even then, they may still think that they might have the prospect of a new client, unless they are Exclusive Listing Agents who do nothing other than take listings. Although, they may have their buddies on the selling-side. That’s whom they may want to refer you.
Call your broker for assistance whenever you have questions or need to see property that isn’t on open house status. Your broker will be delighted to make arrangements to show any property to you.
If you are visiting an open house, the listing agent may be preoccupied with other potential clients and possibly with other agents. “Just looking” or “I have my own broker” may make your visit a clean approach.
It is quite possible that the listing has been taken by an Exclusive Listing Agent, and that agent will most likely be more than happy to answer your questions. They usually expect you to have your own agent. This is becoming the more common practice in those areas of the country with exclusive buyer’s agents and exclusive listing agents.
If your broker isn’t present, collect all the fliers on any properties in which your may have an interest. You can review them with your broker at your convenience.
Finding and Touring MLS-listed Properties
Search the Internet for listings in your preferred area. Many real estate firms will have their own websites, with their listings posted. Pick up real estate magazines that you may find in or near various shopping centers or in motels in your area. Request that they e-mail a copy of their listings to you. They will usually be happy to do so.
Be sure to note the MLS listing number that may be displayed on a For Sale sign on any property of interest. Your broker will usually be able to pull it up on his computer for review.
Note the Following: When calling a large franchise real estate firm’s office, we suggest following this protocol: Do not disclose at this point that you have your own broker, unless they are an exclusive listing office only. The reason for this is simple. Usually the agent who answers your call will not be the listing agent, but may merely be the agent who’s “on the floor” at that time.
These agents will be after your business. If they discover at that time that you have your own broker, or that you have read the book, they will likely clam up instantly and tell you to consult your own broker. If this sounds like crude behavior, it may, surprisingly, be typical with many agents you may call upon today.
When calling major real estate firms, regardless of whose listing you are calling about, the agent assigned “floor time” will be the agent who handles your call. They will expect to find a prospective client on the line.
If you just ask for the listing agent, you may be shunted aside by the agent on the floor at that time. Even then, the floor-time agents may try to tell you that they can handle your call. That’s what they have been instructed to do.
Choosing the Agent is the Client’s Right
It is the client’s decision as to whom he or she chooses to represent them. Unless you have a contract with an Exclusive Buyers’ Agent, you have the absolute right to change or discharge any agent who may have been assigned to you at any time you might wish to do so.
You can choose any agent with any firm. You are not required to have the agent who has shown you the property, nor does that agent have to be the agent who writes your offer. They don’t even have to be in the same office.
Note: If you are looking for financial incentives, such as those offered by our brokers, any agent can show you the property, but your own Exclusive Buyers Broker must write the offer. That’s your key to getting financial incentives and, very possibly, some great seller concessions that are generally not offered by other firms.
Engaging the Listing Agent in Question and Answer Games
They won’t favor discussions such as the seller’s reasons for selling. It’s not the listing agent’s duty to advise potential buyers of what might be pertinent facts above and beyond the normal aspects of their listings.
If they were to do so, they could be acting in the capacity of a “dual agent” without the express consent of their seller and without the agent having disclosed that fact to the buyer. In some states, this may be a violation of that states, Department of Real Estate regulations. It could get that agent into serious trouble as well as a potential lawsuit by the seller.
All agents are alert to the possibilities of acquiring a new client. Calling for information from the listing firm presents them with their best opportunity to get a new client.
That’s why these firms go to great expense to post high quality signs. The agent who answers your call will certainly lavish great attention towards you and may even suggest that they can immediately make arrangements to show you the property.
If you are certain of your sales resistance ability, do not hesitate to view any property that any agent has listed, if you have an interest in doing so. Just be sure you let your broker know which properties you have seen as well as the listing agent’s name concerning properties that interests you.
Remember: many incentives and other potential benefits are offered to you merely for being a member of the group of readers who have purchased this book. Your personal broker who has been assigned to you will go after these benefits on your behalf. Other agents, dual and listing agents, are very unlikely to match them.
Play it cool when looking at any property with any agent. You may think that’s a bit like playing hardball, but that’s the way the real estate game is frequently played today.
It’s your right to view any property with any agent, and then decide whom you want to represent you in presenting your offer to purchase any property. However, if you are under a contract with an Exclusive Buyer’s Broker, you are obligated to use that broker. All benefits you would gain from this arrangement would be lost if you failed to observe this agreement.
Chapter Two
How Does This Program Work?
The Buyer’s Edge Real Estate Group has expressly agreed to represent buyers under the conditions spelled out in this book. They are highly experienced and respected brokers. They have all executed contracts, committing them to all the following:
(1) The broker who may be assigned to you is known as an Exclusive Buyer’s Broker. He is under a binding contract in which he has agreed to provide some great incentives to buyers who we refer to him. He also assumes the responsibility to negotiate, in many instances, healthy concessions from the seller as a condition of the sale to his buyer.
(2) These incentives are all based on formulas discussed in this book. Obviously, prices for properties will vary, as will the commissions generated from their sale. The listed prices and the commission agreements with their listing agent will correspondingly affect the incentives.
(3) Normally, the selling broker has no control over the commissions, which are usually set by the listing firms.
(4) Since commissions, when earned (on closing of the transaction), are the personal property of the broker representing the purchaser. What he does with the commissions is entirely of his choice as long as the disposition conforms to the contract executed by the buyer and the broker jointly.
(5) It is legal and appropriate that a broker representing the buyer have that authority. Said conclusions have been affirmed by the Department of Real Estate in California. We expect that they will be upheld in all states.
(6) In California, the DRE has said, “What a broker does with his own money is his business. He can give it all away if he wants.” If an agent tries to tell you otherwise, it may be time to get a new agent.
(7) Our brokers choose to do this on their own volition. They will
negotiate their contracts as Exclusive Buyer’s Representatives with the buyers.
(8) The incentives for buyers can be all the following:
(a) Some very generous rebates, sometimes up to as much as 100 percent of his broker’s commissions resulting from the sales;
(b) Some concessions from the seller in favor of the buyer, which are negotiated by the broker on the buyer’s behalf.
The latter are, however, subject to a commission being earned by your broker based on the dollar amount of the value of the concessions. The commission is paid by the purchaser to his broker.
This is not something that the industry hasn’t done in the past. Brokers often negotiate with the buyers to secure certain seller concessions. It is, perhaps, the first time it has been codified as a normal part of a broker’s performance agreement with his buyer.
In most instances, it will be a modest fee and may be accounted for by reversing a portion of that part of that commission earned by the broker that is designated as payable to the buyer as the buyer’s “rebate.”
Concessions by the seller frequently result in reductions of the property’s purchase price. In such the purchaser pays the broker’s fee on the concessions by means of a reverse of that portion the sales commission being rebated to the purchaser. (This will be explained in examples.)
Suggested Commission Distributions:
We make some broad assumptions in the following estimates. Readers should be aware that the commissions earned by brokers on any transaction are always subject to negotiations by sellers and the listing brokers. There are no fixed rules governing the fees or their splits. It is, in fact, a violation of federal regulations for any group of brokers to conspire to fix fees.
(a) The gross sales commission received on any transaction, it is suggested that the broker retain 50 percent with a minimum of $1,995. The balance would be rebated to the purchaser; i.e. rebates are usually 50 percent or less, depending on the gross commission.
For example, if the commission totals $10,000, the broker would retain $5,000. The purchaser would be rebated $5,000.
(b.) From the concession valued in excess of $1,000 of incidentals, it is suggested the concessions from the seller that are generated by broker negotiations, which must all be of substantial nature not normally associated with pricing of the property, he or she would be paid 25 percent of the negotiated gross value of the concessions.
The amount is then added to the broker’s portion of the sales commission described above. This is termed a “reverse rebate.”
The gross amount of the reverse rebates, along with that portion of the sales commission originally scheduled to be paid to the purchaser, cannot exceed 100 percent of the initial sales commission being paid to the broker. i.e. the broker can receive only the originally determined sales commission.
This provides a great incentive for the broker to get as many concessions as possible from the seller.
Let’s see how this works out. In the previous example, the sales commission was $10,000. If your broker also negotiates a $10,000 contribution towards the buyer’s closing costs, including the buyer’s mortgage fees, the splits would be as follows:
Buyer initially receives $5,000 from the sales commission and he also nets approximately $7,500 from seller concession toward the buyer’s costs, for a total of $12,500.
The broker nets $5,000 from the sales commission and $2,500 from the concessions, for a total of $7,500.
This part of the transaction may usually be handled in one of two ways, depending upon the negotiations:
(a.) The seller may instruct the escrow officer to pay from his proceeds of the sale the $10,000 concession to the buyer. The buyer instructs escrow to pay $2,500 of that amount to the broker.
(b.) The second alternative would be to reduce the sales purchase amount by $10,000.
(c) In the end, the buyer has a $10,000 reduction in the purchase price, along with $2,500 in cash from the broker’s sales commission.
(d) Obviously, adjustments are made to all the figures due to the lower sales price.
Note: No commissions are due to your broker or are ever charged against any governmental grants, tax rebates or other incentives in any form from federal, state or local sources. Nor are any commissions charged against concessions negotiated by the listing agent, provided they are part of the listing contract.
Note: A reduction in the offering sales price is not considered a concession unless specifically described in the purchase agreement as such. Concessions are always itemized separately, as part of the purchase agreement and must be approved by the purchaser.
For example, If the listing agent had negotiated the concessions, and it was disclosed in the listing agreement, no commission would be due to the broker on this concession to the buyer.
Your broker works for you! Getting rebates from the sales commissions and negotiating concessions on your behalf, as well as securing available governmental grants, makes it a double win-win for the buyer. Our buyers in these situations can profit handsomely!
Disclaimer note: All commissions and concessions are subject to mutual agreement between the broker, buyer and sellers. By law, none are fixed. Those noted are all considered to be examples of our recommendations.
Brokers Follow Strict DRE Regulations
Other states will likely have similar regulations. Readers should determine the regulations that are in effect in their states concerning any suggested item in this program.
Under California Department of Real Estate regulations, at this time, there are no restrictions against any broker giving rebates from his commission to his buyer in any transaction.
Similarly, there are no restrictions prohibiting the broker being paid a commission by the buyer for negotiating concessions from the seller on the buyer’s behalf.
Client-funded incentives to his broker are strictly between the client and his broker. In other states, similar rules would more than likely be applicable.
Following are some specific questions and answers posed to the California DRE.
1. Can a broker reward a buyer with rebates or other financial incentives?
Certainly:
“The broker can pay his buyer his entire commission, if he wishes.”
2. Can a broker charge a commission to the purchaser on the seller concessions he has negotiated?
Certainly:
Those agreements are strictly between the broker and his client.
3. Is it ethical?
Of course it is:
“If a broker wants to give his money away, that’s his business. If the client wants to add incentives to the broker, that’s the client’s business.” – Direct quotes from the California DRE.
Find the Home You Want; Your Broker Takes it From There.
After reviewing the listing on the property you select, your broker will call the listing agent and discuss the property with that agent. If he needs any clarification on any aspect of the listing, or if you have any questions about the property, he will discuss those with you and with the listing agent, as needed.
Your broker may also suggest requesting a title report before making any offer to purchase the property. He would like to know the motivation of the seller for selling his property; this may sometimes be discerned in the title report. Your agent can then structure an offer correspondingly. Perhaps it is a divorce situation, or any of a number of reasons for a distress sale.
You certainly want to know that information, if possible. It can affect your offering price and other conditions. Perhaps the sellers would more than likely entertain the idea of some great concessions! That has been true in a great many situations.
Note: Short Sales and REOs (Real Estate Owned) are less likely to have seller concessions. Nevertheless your designated broker may be able to negotiate some concessions. This has been common. (Banks don’t like to hang onto properties they have foreclosed upon. In most circumstance, they will be open to offers!)
Your broker will certainly want to know about your impression of the property and discuss all options of an offer with you before writing it up. Be sure to discuss the good as well as the bad aspects of the property, if any, from your viewpoint. Let your broker know of any concerns you may have about the property before progressing further. Perhaps he can get them resolved quickly.
When writing an offer to purchase, it may be tempting to ask for a good many seller concessions. However, it’s wise to be prudent. Be willing to settle for less than what you may like to ask for in any offer.
On the other hand, you would be surprised at what some sellers will accept by way of concessions. If you don’t ask, you will never know if it is something to which the seller might agree.
But it also has to be tempered by good judgment. This is not the time to make frivolous requests. That’s where your broker’s experience counts.
Chapter Three
After Making the Offer to Purchase
There are three possibilities:
(1) Your purchase offer may be accepted as written. In that case the transaction will carry the signature of the seller and will require your signature acknowledging the acceptance by the seller. It will then be submitted to the escrow office designated.
(2) It may be rejected, with various reasons given, such as, another offer has just been accepted, in which case they may ask if you want to consider your offer as a backup. You can accept that. Be sure, however, that you have options to continue looking for another property. If you find another property for which you wish to submit an offer, your backup will be removed, at your request.
(3) Your offer may be countered by the seller. Or the listing agent will contact your agent for further information, possibly to request an extension of time, as her client may be out of town. Your broker will probably suggest setting a specific time frame for a response by the seller.
Listing agents will usually respect those time limits. Or the listing agent may call your agent if her client is still out of the area and they need more time to consider the offer.
The listing agent may also want to discuss the offer with your agent before countering. This is common. In the latter case, your agent will discuss the conversation with you.
Whatever the response, your agent will discuss all options with you, to come to a conclusion as to what you would like to do.
You’ve Got a Tiger in your Corner!
Your agent, if he is one of our Exclusive Buyers Brokers, is that tiger. Our brokers are most likely very highly experienced. When drafting an offer to purchase on your behalf, they discuss strategies with you and discuss other issues prior to completing the task.
Any offer submitted on your behalf is certain to meet your wishes. You will indicate an approval with your signature on the document.
In the offer your agent will be asking for seller concessions, all of which you will have approved beforehand; they won’t necessarily be ones that the seller may be looking for, however. They usually aren’t.
The agent representing the seller may suggest a counter offer, which will then be presented to your broker. The two of you will then discuss the counter. It may come to a compromise; most transactions do. But your broker, especially if he’s one of our tigers, will protect your interests all the way.
He may suggest:
(a) Accepting a counter offer;
(b) Countering the counter offer; or
(c) Just rejecting it out-right, and perhaps he will suggest looking for another property.
Your broker would usually do the latter if he considered the counter offer by the seller was unreasonable. Keep in mind that your broker works for you, not the seller. He will suggest price, terms, seller concessions and conditions that he thinks are in your best interests.