1. In this chapter: >Formulating an offer >Negotiation know-how >Working toward a purchase contract >Presenting offer in person >When you cannot personally present the offer >Offer and counteroffer procedures 6. Offer through Accepted Contract 90

2. FORMULATING AN OFFER When your buyer clients have found right property, next step is formulating an offer that will lead to accepted purchase contract 90

3. FORMULATING AN OFFER Factors include: Price of similar properties Property condition Length of time on the market Supply and demand Seller’s motivation Terms Return on investment 90

4. NEGOTIATION KNOW-HOW 1.Identify your buyer client’s priorities 2.Assess strength of negotiating position 3.Plan a negotiation strategy 4.Assess big picture 5.Write the offer 6.Follow through 91

5. Identify the Buyer’s Priorities 91 Price? Closing date? Closing costs? Seller’s personal property included in transaction?

6. Assess Strength of Negotiating Position General market conditions Property selection Buyer’s financial strength Seller’s situation 92

7. Strategies for Buyer’s Markets Keep up-to-date on price adjustments Shop around for good mortgage terms Request contingencies or extras Ask seller to assume some of closing costs or fees Shorten time period for seller’s acceptance All cash or pre-approved mortgage commitment 93

8. Strategies for Seller’s Markets Obtain mortgage commitment pre-approval Offer list price or more Make first offer the best offer Keep contingencies to minimum Pay cash for all or majority of purchase 93

9. Plan a Negotiation Strategy Establish overall strategy starting with initial offering price and terms, and include acceptable price and terms as ultimate goal 94

10. Plan a Negotiation Strategy Remember, key to successful negotiation is ability to see and understand your buyer client’s and other party’s positions 94

11. Assess the Big Picture Step back Provide client with any information that may be helpful for making informed decisions as you progress together through negotiating process 95

12. Write the Offer Property address Sales price and terms Seller’s promise to provide clear title Date for closing Earnest money Prorations Who will pay for title insurance, etc. Type of deed Federal- and state- required provisions Final walkthrough inspection prior to closing Length of time for which the offer is valid 95

13. Follow Through Be ready to implement rest of your negotiating strategy when seller makes counteroffer. Keep negotiating process at professional level. 96

14. ADDITIONAL CONSIDERATIONS Ensure your buyer is fully informed Any oral promises are not enforceable If seller accepts offer, it becomes binding contract Once offer is accepted and becomes contract, attempting to walk away is serious misstep 96

15. WORKING TOWARD AN ACCEPTED CONTRACT At this stage, role of buyer’s representative is to provide information and advice, not to determine what is “best” for client 97

16. PRESENTING THE OFFER IN PERSON 97 In many markets, it is customary for buyer’s representative to fax offers Distinct advantages to presenting offer in person See Figure 6.1

17. PRESENTING THE OFFER IN PERSON When you submit buyer’s offer by fax, you’re: Entrusting another agent to present your client’s offer to the decision maker Possibly exposing your client’s offer to all other agents in that office 98

18. PRESENTING THE OFFER IN PERSON Benefits to presenting offer in person: You will know more about seller’s situation and concerns You will be confident that your buyer’s offer and terms were described in a manner that hopefully favors your buyer 98

19. PRESENTING THE OFFER IN PERSON Benefits to presenting offer in person: You handled negotiation process in professional manner 98

20. PRESENTING THE OFFER IN PERSON Tips for successful in- person presentation: Create a friendly atmosphere Explain the offer 18

21. Timely Presentation of Offers Timely submission of buyer’s offer is your duty to buyer 99

22. OFFER AND COUNTEROFFER PROCEDURES. 100 Per NAR Code of Ethics, all offers and counteroffers must be presented to the clients up to closing or until such time that the clients, in writing, no longer want to entertain offers

23. WHEN YOU CANNOT PERSONALLY PRESENT THE OFFER Verify listing agent is available to receive offer before faxing it Consider personally presenting buyer’s offer to listing agent 102

24. WHEN YOU CANNOT PERSONALLY PRESENT THE OFFER Include cover letter written by buyer Request that seller counter or reject offer in writing 102

25. HANDLING MULTIPLE OFFERS Buyer or buyer’s representative must ask for whether there are multiple offers and seller must consent to divulging it before seller’s representative can share this information NAR white paper is Figure 6.2. 102

26. NEGOTIATION—CORE COMPETENCY FOR BUYER’S REPRESENTATIVES Negotiation is core competency. Seek advanced training on this topic. For a look at additional negotiation tips, see Figure 6.3. 107