When presenting offers, use a contract or napkin?

Question

When presenting an offer do you typically do so within a contract ready to be signed or could it just be on something less formal ('napkin') needing more or less a verbal agreement soon after which you provide seller with a contract to sufficiently look over, possibly with some  attorney/consultant then officially sign?

I'm thinking the former might seem pushy and as a habit time consuming and paper wasting, yet efficient and effective at getting acceptance. Is it a matter of preference? How do you normally do it? Thanks!

John Thedford · Answer

@Benjamin CowlesI am happy to write an offer and present it prior to discussion. This can be listed or off market properties. When presented, I sell myself and what I have to offer. Anyone can toss out numbers. What are they offering? 135K and six month closing? 135K with assignable contract and no intent to close? 135K, 5 day contingency, non-assignable contract?  It isn't always about the numbers. It IS about meeting the sellers needs and giving the seller the best terms to meet them. It IS about giving the seller the confidence to accept your offer believing you will perform. Will writing a contract on a state approved form be more professional than a napkin? Sure. Will that be the determining factor for the seller? Doubtful.

Jim Pellerin · Answer

Yes there is a risk that the seller would change their mind but then you have reduced your risk of having a stronger commitment. You can always shoe them your blank contracts.

Benjamin Cowles · Answer

Thanks Ned.

Benjamin Cowles · Answer

thanks @Gino Barbaro. Looks like the answer depends on the situation, agent or no agent, level of rapport etc..

Ned Carey · Answer

It depends on the deal.

Since you are talking about dealing directly with the seller, (not listed properties) then you need to come to some kind of verbal agreement before you write up your offer. Otherwise you wouldn't know what to write in the first place.

When dealing with listed properties offers are normally made on a full contract with all terms and conditions spelled out.

Benjamin Cowles · Answer

thanks @John Thedford and @Jim Pellerin! Very helpful answers.

John, does everyone get a contract or don't you initially present verbal offers when, and often I'd imagine, the likelihood of acceptance isn't so great?

And Jim, isn't a letter of intent leave you at more a risk the seller backs out while you're working to bring buyers aboard whether by the seller losing their nerve or encountering another more favorable offer? Not that you wouldn't want to discourage a change of mind absolutely but before setting out to find a buyer to secure a deal wouldn't you want a certain level of commitment from your seller? Or is this a comfortable balance you afford the seller you feel in the long run gains better relationships(?).

Thanks!

Gino Barbaro · Answer

@Benjamin Cowles

Hi Benjamin

I would draw up a letter of intent and have the broker send it over, especially if you are dealing with a new seller.  It will show you are serious and professional.   Most real estate agents have one or you can find one online.

I am in the process of closing on a 16 unit property and did the napkin route because I had done a previous deal with the seller and no broker was involved.

Once the letter of intent is agreed upon, then proceed to the contract

Jim Pellerin · Answer

First I get an agreement in principle based on a discussion. Once we agree on terms, I issue a letter of intent. I am looking for a buyer and they know that. Once I find a buyer the I issue all the formal contracts. I used to spend a lot of time drawing up contracts for sellers that would not be interested. This saved me a lot of time.

John Thedford · Answer

I like the formality of a contract. I present signed offers with around 5-7 days for acceptance. I don't like high pressure sales and don't put that on other people. IMO, it really isn't as important as what the offer is written on as what the offer is and WHY they would do business with you. I like to tell potential sellers something like this: here is my offer. Please look it over and let me know if you have any questions. I am a buyer, do not make my contracts assignable, and will close quickly if you desire. Beware the frauds that will tell you they want to buy your property and then ask for 30-60 days "inspection periods". They have no intention of buying it but are rather trying to resell the contract. This is why I am only asking for a five day inspection. By that time, you will have my answer as to whether we have a deal.

I just closed on one on 9/30. That is pretty much what I told the seller. He stated he got an offer at 135K. I had offered 120K and he accepted mine. Selling yourself, your service, and your integrity will beat out 99% of the fraudster "wholesalers"...and it doesn't matter if your offer is on a napkin or a state approved form.