3 Reasons You Need a Verbal Agreement Before You Write an Offer
Published on: Friday, December 18th, 2015
Obviously, in order to make any real estate agreement come to life and actually close, you need a written purchase agreement. One thing I’ve learned over the years and after closing hundreds of deals is that there are ways to cut down the amount of offers you write and save yourself a lot of time.
I used to just fire off written offers to motivated sellers without any type of verbal agreement or negotiation, and it was frustrating when most of them got rejected.
Now I only write offers when my seller and I are pretty much on the same page with price (or close to it).
Doesn’t Work Every Time, but It Works Enough…
There are still sellers who insist you write them an offer without any verbal negotiation first. That’s fine, and I’ll do that, but it’s pretty rare. It usually happens when the seller is taking as many offers as possible from cash buyers, and just choosing one.
If you’re doing your marketing right, you should have plenty of sellers who will verbally discuss and negotiate the deal prior to anything being put in writing.
Here are the 3 main reasons why coming to a verbal agreement first is important for the efficiency of your time in your business:
#1. Sellers Are More Likely to Sign When It’s Been Discussed Previously in Detail
There are two main components to a real estate purchase agreement: Price and Terms.
When you take the time to explain why and how you came up with your price, sellers are more likely to be open to your offer. You can get into repairs, comps, etc.
When you simply fire off a number in writing, they’ll scratch their head and wonder how you came up with it.
The other key component you’ll discuss is terms. You’ll discuss how easy the transaction will be (“as is” with no inspection, all cash, quick close, etc.) and they’ll expect those items in the offer.
Again, when you have an interactive discussion about price and terms, more sellers will sign your offers quickly, and you’ll close more deals.
#2. Offer Contracts Take Time
In my state, the offer contracts are 9 pages. Now, I’m not complaining about the 15-20 minutes it takes to write them, but time is precious.
I’d rather spend that time talking to more leads and building rapport with more sellers who’ll be more likely to do business with me than to spend time writing multiple offers on deals that won’t come together anyway.
#3. Sellers Will Trust Your Offer More Than Other Buyers’ Offers
Some of the deals you do will involve the seller working with other buyers. Luckily for you, most of those buyers will walk through, leave, and make an offer without spending much time in discussion with the seller.
This is a perfect opportunity for you because you ARE willing to interactively discuss what will go into the deal, what repairs are needed, comparable sales, etc.
You’ll explain what you’ll do with the house and other details to build trust with the seller. You’ll do all of this before you make an offer in writing.
As you can see, there’s much more to this strategy than just saving time with the actual offer writing. You’re building massive trust and rapport with the sellers, which will only increase the likelihood of them signing your offer!