During this slow market, buyers see fewer multiple offer situations when purchasing a home. The lack of competition can sometimes allow buyers to make lower than list price offers.
Denny and Monica break down what changes they have made to help their buyers create solid offers that will help to win over the seller.
This episode will cover what you need to know for negotiating the best price, the importance of “picking your battles,” how paying attention to detail can have a significant impact on your offer, the keywords you should include in your contract, and the benefits of explaining your offer as a buyer.
Read the Transcript Here
Hi everyone, I’m James Garbutt. And I’m Denny Dumas. And this is the Garbutt Dumas Real Estate Podcast.
Monica: The market is slower. What changes when you’re writing offers? What has changed for you Denny, that’s different from multiple offers from the buy side?
Denny: Quite a bit. In a typical offer scenario, when you are representing a buyer, let’s start with the buyer. Don’t know why, sounds like a good place to start. When you’re representing a buyer. You’re typically trying to find out as much information about the seller as you can: where they’re going, have they bought, what kind of dates they’re looking for? How long have they been on market? How long have they owned the home? Lots of these things which will give you some guidance into whether or not they’re going to be flexible in terms of price for sure. But other details as well.
When you are writing an offer, and you are trying to negotiate the best price, it is important to know we use this term like “pick your battles”. If you’re asking for every single thing you’re probably going to annoy the other party and it really is this beautiful meld of creating a friendship through this piece of paper that is a contract to purchase and sale. And if you are willing to give up some things whether that be like, crossing out an oil tank term, whether that be moving your completion and possession dates a couple of weeks either way just to accommodate the other group. They’re likely going to be more willing to work with you on something else that might be really important to you such as price. You’re trying to negotiate an extra 10 grand off that number and you’re also wanting a really quick completion that is inconvenient for the seller, you’re probably not going to get the best of both worlds. So I think being open minded to focusing on whatever that really important thing is, is that price? Is that quick completion because you’ve already sold your condo, whatever that may be, is very important and will help get the deal together.
Monica: Yeah, on the buy side, I think attention to detail when you’re putting this contract together is really, really important. You know, we wrote so many offers for buyers in the last two years, so many offers and every single offer you had to make sure it was flawless, perfect. Everything was worded perfectly because a lot of them were subject free. So there was absolutely no room for error. And what you said had to be what you meant, like that was it.
And right now we’re seeing a lot of buyers offers are kind of lazy and I think that, like this is not the time to let your guard down if you’re a buyer’s agent, make those offers like package them together just really really nicely. And if you’re writing an offer that’s below market value, or if you’re writing a lowball offer some really easy things to help disarm a possibly emotional seller… because they’ve already reduced their price twice and here you come with your low offer. Simple things like taking out the word “professional cleaning”, change it to “cleaning” like “the property will be clean on possession” instead of “professionally cleaned”. Because right away the seller is thinking “Oh that’s $600” and then you have “Oh the carpets have to be steam cleaned on possession”. Like takeout steam clean, just have the carpets clean. You know, your, your buyers can get the place professionally cleaned and steam cleaned when they move in. If you’re getting you know 10s of 1000s off of market value. I think little attention to detail like that will help disarm a seller.
And the other thing is inclusions and exclusions. Make sure you have the right inclusions and exclusions. It’s so important. If they don’t have a microwave, don’t write a microwave in, like it’s really really simple. As far as exclusions go if they specified things on the listing that they’re planning to take with them. Make sure you know what those are and make sure they’re written in the exclusions.
So which brings me to my next point, which is just read the listing. Listing agents put beautiful little nuggets for you in there. They tell you all the secrets that the seller wants if you just read the listing really, really well. Make sure that you know everything don’t write a storage locker is included if there isn’t a storage locker with the unit just things like that attention to detail will really help the listing agent when it comes to making your buyers, happy getting them a wicked deal
Denny: On the buy side too, explaining your offer a little bit. So in a lot of cases right now, because you’re not competing, buyer’s agents are not putting very much effort into their offer. So they’re missing things like exclusions or inclusions. They’re also not explaining potentially the dates that they’re including, potentially the deposit amount that they’re including. If it is slightly low, a deposit amount, often that will trigger a seller and like the first question is: “Why is the deposit not 5%?” On a million dollar sale, let’s say the deposit is $40,000 instead of $50,000. And so like trying to talk the seller off the ledge. If we have a little bit of information from the buyer’s agent, it’s a lot easier right? “Hey, you know they’ve sold their condo. Most of the most of their equity is or most of what they’re going to be buying this home with is in their condo and equity. This is how much they have available saved right now. They’re kind of scraping together everything they’ve got in their checking account for this deposit. That’s why it’s $40,000 We just don’t have $50,000 cash.” Perfect. We can explain that to the seller versus often on the like, flipping over to the sales side if you’re a seller.
A deposit is an interesting thing that a lot of people get caught up on that, really, like again, pick your battles. How important is it that the deposit that is sitting in the trust account until the completion date that you’re not having access to, it’s going into the down payment. Is a buyer more likely to walk away from a deposit at $40,000 versus $37,000? Probably not right? It’s a lot of money. These people are buying homes for themselves to live in. This is, this is their life savings. They’re not walking away from that in like, unless it’s some extremely rare case.
But those are some of the things where we’ll like on the buy side, we’ll get a, we’ll get a counter back and the deposit has been crossed out at 40 grand that’s been up to $45,000 and those are just the things that like will annoy the other party especially if you haven’t gathered any information on this.
Monica: Yeah, that’s like kind of leads right into my next point which is from the listing side. If you do receive a contract where, where the exclusions and inclusions aren’t there, where there’s you know, the cleaning and different things the dates are unclear, the deposit’s unclear. Get all those answers before presenting the offer to your seller. To make it the like, the best chance at getting a successful offer together is information, you know, read through the contract. Step One: read the contract. Step Two: to call the buyer’s agent back and ask them about the contract. What can you tell me about you didn’t send me any comps, like what can you tell me about the price? Why is the deposit low in case my seller asks? Because then when you present it to the seller, you’ve already answered all of these like anxiety questions, and that you’ve just getting to the meat of it like, this is the offer and I think that’s really, really important in markets like this when you’re in one on one negotiation.