Negotiation Skills for Business, Salary and Debt
Real Estate Sellers Should Never Negotiate a Verbal Offer
Real Estate Sellers Should Never Negotiate a Verbal Offer
Under no circumstances should a real estate seller ever negotiate a verbal offer. It does not matter who is presenting the offer to purchase, a verbal offer should be avoided at all costs. If a verbal offer is passed along to a seller by the way of a Realtor, shame on the Realtor. Whether it is a buyer's Realtor of the seller's Realtor they should know better than to place a Seller in such a bad negotiating position. Steer clear of professionals that practice such poor behavior.
Included in a written Offer to Purchase should be the complete terms of the sale. Many of these items are potentially critical and all of them are entirely negotiable by the Seller.
Minimally an offer to purchase real estate should contain: · Total price · Deposit amounts · Additional deposits and dates · Identify holder of deposit money · Contingencies o Financing amount and when obtained o Inspections and when preformed o Who pays for inspections o Permits or approvals o Who pays for permits and approvals · Commission amounts · Who pays for commissions · What's included in sale (what goes & what stays) · Time allowed to meet contingencies · Conflict remedies · Special provisions · Closing transaction date · Location of closing · Identification of property · Date
By negotiating a verbal offer the seller is placed in two very bad situations. First the buyer is talking (remember talk is cheap) one sidedly about the price without making an actual commitment because there does not exist deposit money from the buyer at this point to bind the outcome of the discussions. Everything that has been spoken of can change on a simple whim. Secondly and more importantly a buyer can pick apart a seller and take extreme advantage of the seller by negotiating piece meal, one item at a time. Sellers need to see the entire proposal in order to make a good decision and prevent being taken advantage of. By working verbally a seller could find themselves in a position where they are all excited by concentrating solely about the price only to be disappointed weeks later by any of the other sales terms. Perhaps a seller finds out much later on in the process that the buyers have a house to sell or that the buyers need the seller to carry a second mortgage in order to obtain the necessary financing. It could even be something strange like the buyers want the house to come fully furnished. With the exception of price all of the other many important terms have been left wide open because the complete sale specifications were not in print from the very beginning. The point is the seller cannot be sure what the terms of an agreement are and they do not know what can unexpectedly appear later on because they were not spelt out early on in the negotiations.
In order to have a clear meeting of the minds, there needs to be a complete understandings from both side of all the agreed upon terms. An offer to purchase needs to be in writing, contain all the necessary terms of agreement and contain a good faith binding deposit. If you are self marketing do not fall into the verbal offer trap. Accept and discuss only what is in writing and is accompanied by a deposit. Remember that if you are unclear about what any of the terms of the sale are you need to definitely seek out legal advice before you sign.
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