Negotiating Offers in a Hot Austin Real Estate Market
The other day I found a home my buyers loved and for which they wanted to write an immediate offer. I called the listing agent to inquire about the status of the listing and to ask questions about any particular needs the Seller might have. The agent said to me, and I quote exactly, “I’m sorry, we’ve already accepted an offer”.
Question: What is the next thing I should say as the Buyer agent?
1) “Darn! Oh well, congratulations on the quick sale, I guess we’ll keep looking. Bye”
2) “Has the offer been signed?”
I always ask #2 when told an offer “has already been accepted”. In this instance, I was told the Sellers were on their way back into town from a trip and would be signing the offer later that evening.
Now, this is where it gets tricky in trying to help Buyers get the house they want in a hot market. Technically, the house is not sold. No deal is done until everybody has signed. Period. The Seller has no obligation whatsoever to stick to an oral agreement. But Buyers, Sellers and Agents often choose to honor their oral agreements while the logistics of final changes and signatures are being accomplished, and I respect that. Personally, I wish we could all work that way, but that’s not how it works.
I can’t bully my offer onto the table by saying to the agent that verbal offers are not final and demanding that my offer must be presented. Instead, the best thing to do is to cordially sell the listing agent on the notion that it sure won’t hurt anything if the Seller were to have another offer to consider before signing the first one, and that we’ll certainly understand if the Seller decides to stick with the first offer, but there is no downside to having another offer to look at, is there?
So I simply had a nice conversation with the Agent. Finally, the other agent said, “well, why don’t I just call the Seller and see what they want to do”. This is exactly the proper thing for an agent to do in this circumstance. Let the Seller decide.
A few minutes later the agent called back and said that the Seller could not be reached, and told me to go ahead and send over the offer just in case he did want to consider it. Then I asked more questions, found out the Seller was buying a new house but needed to sell this one first and had not yet found the new house. This sort of thing is important to know before writing an offer. My Buyer can’t move until late June and so is in a position to offer a short lease-back to the Seller. This means the Seller can sell the house, then temporarily lease it back while waiting to close on the new house. This means the Seller only has to move once instead of twice. A powerful motivator.
So we wrote it up stating that the Buyer can be flexible on the closing date and/or offer a lease-back to the Seller. It was also full price and cash. We also wrote a 5 day Option Period, which meant that even if my Buyers flake out, the house will be back on the market Saturday and the Seller doesn’t lose a weekend of market time. The offer also included a copy of the Buyer’s bank statement showing all funds were available for the cash purchase. Additionally, the offer was written clean, with no goofy provisions or nonsense – a “ready to sign” offer.
The agent called back that evening. The Seller had signed off on our offer and had taken us up on the flexibility of the closing date (changing it to a week later) and the temporary lease-back of 1 week. The next morning, my Buyers initialed the closing date change and signed the temporary lease. Done deal.
Do I feel bad for the first people who thought they had a deal only to get knocked off? A little bit. I’m human. But I don’t represent that Buyer, I represent my Buyer. Did the first Buyer get screwed? No, they simply lost out to a better, more agressive offer. There are things their agent could have done to anticipate this possibility and prevent it (another blog topic later!).
Did the Seller do the right thing? Yes. The Seller has a right to consider all offers before signing, even if he has “verbally accepted” another one. Some Sellers in fact have an emotional hard time doing this, but that’s why a good agent needs to act as a buffer between Buyer and Seller, so the Seller doesn’t forget that this is a real estate business transaction, not a friend-making adventure.