Thank you for coming to this week's video blog.
My name is Robert Rico here at California Realty Training.
Hey, thanks for coming and visiting us today.
We're going to bring some more great information for us, particularly of course in the real
estate field.
Hope you've been doing great.
Listen, today's topic: How to Make a Good Offer.
How to write a good offer.
Do you want to be an agent?
You've got make sure you're familiar with this kind of stuff, huh?
And you've got to make sure you're familiar how to write a good offer, especially if you're
planning on concentrating with buyers because buyers want a realtor who know how to write
good offers.
And not just your typical offer, but a good offer.
An offer that's going to get what?
That's right.
Accepted.
Right?
Now this is how it works.
As a real estate agent, you're going to hope to work with a lot of buyers in your real
estate career.
Now, in my career, I've worked with tons of buyers.
Of all the transactions I've done, I would say approximately, I don't know, 75% have
been dealing with buyers.
And it's fun with the buyer's emotional.
Emotional meaning once they get into an escrow, they really want this house.
They can feel the joy.
They can see the future in this house.
It becomes pretty darn emotional.
That being said, many a times when they see the house for the first time, they're depending
on you, depending on you the realtor, to make it happen, which means you've got to make
a good offer.
It all starts with the offer.
And guess what?
I hate to tell you this, but they're looking at you for advice.
They're saying, "Hey, Mr. Realtor.
What kind of offer should we make?"
And looking at you, looking eye to eye with you saying, "What do you think?"
Now, let's talk about the basics on how to write a good offer.
Let's start with the most basics of the basics.
If your buyers want this house badly, I mean, they've got to have it they've been dreaming
about this for years, number one: Let's talk about the earnest money deposit, the EMD,
the earnest money deposit.
Now, that's the buyer putting down money to have this house taken off of the market.
That's the buyer saying, "Hey, Mr. Seller.
How you doing?
Listen, I want to make you an offer and if you accept my offer, I'm willing to give this
amount of money."
Boom.
And give it to an escrow company to take your house off of the market.
Now, of course, the bigger the deposit, the more serious the buyer.
Sellers like that.
If you have a buyer that wants something really bad and they're only willing to give $1,000
up, they're only willing to sacrifice $1,000, does that sound serious to you?
Of course it doesn't.
Let's assume a house is $1,000,000.
"Hey, we want to buy this house.
It's $1,000,000."
And the buyer only wants to put $1,000 as a deposit?
No, that's not good at all.
Now, typically a really good, good deposit, a really good EMD, earnest money deposit,
is 3%.
Now, what's 3% of $1,000,000?
Do the math.
Well, 3% of $1,000,000 is $30,000.
This guy's willing to give $30,000 and put it in an escrow account, he must really want
my house.
This is a serious buyer.
That's step one.
Step two of course would be the sales price, the offer price.
What is the buyer willing to offer?
Now, let's assume this house is listed at $1,000,000.
$1,000,000.
We'll have to decide what would be a good offer?
What is not a bad offer?
What offer would be completely, completely unreasonable?
And in my point of view, of all the offers I've made, if you want something bad enough,
you better at least give, what?
That's right.
List price.
If you want $1,000,000, give them $1,000,000, if you want it bad enough.
Of course, there are other factors we have to consider.
What kind of market are we in?
Is it a buyer's market?
Is it a seller's market?
We have to consider tons of stuff.
But at the end of the day, when you have the whole transaction right here in front of you,
there's something that they want and they want it bad enough, if the sellers want $1,000,000,
what should you offer?
That's right.
$1,000,000.
Now, let's assume that this house that they really want, because you as a realtor are
going to have access to all the information, let's assume that this house that they want
has been on the market for a long time.
Ready?
We call that DOM.
D as in dog.
O. M as in Mary.
We call that DOM.
Days on the market.
You as a realtor need to know what is the days on the market on this property.
You want this house?
They're asking $1,000,000 for it.
You as a realtor will know that the days on the market is, I don't know, seven.
This house has been on the market for seven days.
Now, that's pretty darn fairly new.
This house has only been on the market this amount of time.
That's nothing.
Do you think there's wiggle room to negotiate with this price?
It being only the market for seven days?
Probably not.
Let's retrack on the example.
Let's assume that this house, which they want $1,000,000 has been on the market, DOM, two
months.
Hell, let's go worse.
Let's go four months.
Four months.
This house has been on the market four months, no action.
Now, you as a realtor, think about this.
Do you think there's going to be wiggle room?
Do you think these sellers are going to be willing to negotiate?
They've been wanting $1,000,000 for four months.
No one has bitten.
Nothing's gone on.
Is this a good chance for the buyer to negotiate and possibly offer less?
I mean, that's logic.
Of course that would be a reasonable, so you come in with a lower offer, unless the buyer's
what?
Want it bad enough.
All these you have to consider as a realtor when you're going to give your advice to the
buyer.
Another thing that you might want to consider to make a good offer is what we call contingencies.
Here's the deal when it comes to contingencies.
The buyer says, "Okay, Mr. Seller.
I willing to give you list price of $1,000,000.
I'm willing to give you 3% for the earnest money deposit."
So far, so good.
"But I'm only willing to give this to you if I sell my other house first.
I've got to sell my other house first."
Now, that's called a contingency.
That's our contingency sell of my private property.
"Mr. Seller, how are you?
I'd like to make you this offer.
I want to give you exactly what you want, $1,000,000 and I want it so bad, I'm wiling
to put 3% down, which is $30,000.
Here you go.
All of this means nothing, Mr. Seller, if I can't sell my house over here first.
I've got to sell my house over here to buy your house."
That's called a contingency.
That's called and only if.
That's called what I say only if.
"I'll buy your house only if I can sell my house over here."
Now, would a seller get trapped into an offer like that?
Would a seller be willing to wait on the sideline, to wait and sit and wait in hopes of you selling
this house?
I mean what if this house never sells?
Well, then he never gets his money over here.
That make sense?
That's called a contingency.
That's a only if.
"I'll buy your house only if".
These contingencies can bother.
These contingencies can get under the seller's skin and have them say, "You know what?
Uh-uh.
Your offer is just too darn ugly."
Another contingency that many buyers come along, just as an example, an appraisal contingency.
"Hey, Mr. Seller.
How are you?
I'll give you $1,000,000, just like you want."
That's good.
"I'll give you your 3% earnest money deposit, just like you want.
I don't have to sell my house to buy your house, just like you want.
But I want to make sure this house appraises at a $1,000,000, Mr. Seller.
Mr. Seller, this is the deal.
I'm going to send an appraiser out to your house, this house that I want to buy, this
house that I'm interested in.
But if the appraiser, who's job is to come look at this house and give me a value."
This appraiser's job and that's all he does all day long is to come to this house and
say, "Hey, this house is worth $1,000,000.
This house is house worth $950,000.
This house is worth two" ... whatever it is.
This appraiser's job is to come in and say, "This house is worth" boom.
It's value was this amount.
And that buyer's saying, "If my appraiser goes in there and says this house is not worth
the $1,000,000 I offered you, I have the opportunity, I have the right to walk away.
Give me back my 3%."
Now, that's very typical when there's a loan involved.
That's a whole other can of worms.
Don't worry about it.
But that's called a contingency.
That's the only if.
"Hey, Mr. Seller.
I'll buy your house only if".
The less only ifs, the less contingencies we have, the more comfortable the seller.
The more comfortable the seller, that means it's a good offer.
You with me?
These are just a few of the items you might want to remember when making an offer: Give
a good earnest money deposit.
Think about the price, of course the price if crucial and you can base the price on the,
that's right, the DOM.
And last not least, I want you to consider the contingencies involved.
"Hey, Mr. Seller.
I'll buy your house.
We'll make an offer on your house only if".
Now, these only ifs, if they are included, you might scare the seller.
And the seller might say, "You know what?
Go away.
Go find yourself another house."
You with me?
Good.
You want to make a good offer?