Here's what NOT to do when submitting an offer....

Buying & Selling Real Estate
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Here's what NOT to do when submitting an offer....

Marc M.
Contractor · Rockville, MD · Member since 2014 · 423 posts · 135 votes

So I'm buying a personal residence for myself.  Came across this house that fit nearly all my parameters but the place needed a lot of work and they were asking more than I qualified for.  Passed on it and kept searching.

A week or so later, my agent gets an email from the listing agent saying that the owners needed to sell and wanted to know what I would offer.  It had been on the market for about 4 months.  House was listed for $399k, was worth about $450k fixed up but needed between $60-80k in rehab.  

I put an offer in for $300k, really thinking they weren't going to take it but that's the price I would have needed to be for the rehab cost and equity I was looking for.  Signed the offer, sent it in, then the listing agent asked for a financial information sheet, which I'm still not clear the point of since it doesn't require any supporting docs.  Due to an insane work schedule this week, it took me about a day and a half to get the info sheet back to the listing agent.

Turns out that just before I sent it back in, another offer came in which they accepted.   Come to find out that my offer had been accepted and signed, they were just waiting on my info sheet.  Poof goes about $150k in nearly instant equity and a great house I was starting to believe might actually become mine.  I'm kicking the crap out of myself right now but I learned a valuable lesson.

Moral of the story: don't sit on paperwork when it comes in.  Knock it out and get it back to your agent so someone else doesn't swoop in and steal a deal out from under you, regardless of how far-fetched it may seem.  I'm beating myself up because blaming my work schedule is really just an excuse, I could and should have made time to get it done and I explicitly remember thinking to myself, "It's been on the market 4 months with no traffic.  It can wait another few hours."  No, apparently it couldn't.

Next step is to send out a direct mail campaign to owners in that neighborhood.  I'm going to find a better deal than that one; it won't be easy but I'm sure as heck going to try.  First offer will be for $299,999. :-)

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Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
10y

"The things that come to those who wait, are the things that are left behind, by those that got there first"......Me (my epitaph, and tagline on my emails)

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  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    10y

    Did they tell your agent that it was signed and accepted? Then you have a binding contract. 

    Um, you need a new calculator. There was not $150 in equity if it needed 60-80 in rehab

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Marc M. did you mean it WAS NOT sign and accepted.. Its also common in these deals even if they sign them they are contingent on you providing prequel they accept or POF.

    in our market no REaltor worth their salt would even show you a house or write an offer without a rock solid pre qual or POF ready to submit with the offer.

    Also if your in a market were EM money is traditionally small ... use a big EMD to make your offer stand out.. I have bought more properties with competing bids just because I put in a 10 to 20k EMD ... PDX our market for whatever reason was always a 500 to 1k EMD could never figure that out.. were in the Bay Area were I am from EMD is usually 5 to 10% of purchase price. So when I really wanted something I just cut a bigger check for EMD and if it was priced right a few grand higher that was the other thing that was novel to our market was an offer over ask.. I got so many by offering a mere 1 to 2k over ask it was hilarious.

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  • Marc M.
    OP
    Contractor · Rockville, MD · Member since 2014 · 423 posts · 135 votes
    10y
    Originally posted by @Ned Carey:

    Did they tell your agent that it was signed and accepted? Then you have a binding contract. 

    Um, you need a new calculator. There was not $150 in equity if it needed 60-80 in rehab

     I believe she may have been told after being informed the other offer was accepted.  I'm not sure though but she's a very experienced and well respected agent so if it could have gone through, I'm sure she would have mentioned it.

    The $60-80k in rehab was really to update it since it hadn't been since the 60's.  In reality, it was completely livable except for the kitchen.  I planned on redoing it myself at a cost of $5-8k and tackling the rest later on as needed.

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  • Marc M.
    OP
    Contractor · Rockville, MD · Member since 2014 · 423 posts · 135 votes
    10y
    Originally posted by @Jay Hinrichs:

    @Marc M. did you mean it WAS NOT sign and accepted.. Its also common in these deals even if they sign them they are contingent on you providing prequel they accept or POF.

    in our market no REaltor worth their salt would even show you a house or write an offer without a rock solid pre qual or POF ready to submit with the offer.

    Also if your in a market were EM money is traditionally small ... use a big EMD to make your offer stand out.. I have bought more properties with competing bids just because I put in a 10 to 20k EMD ... PDX our market for whatever reason was always a 500 to 1k EMD could never figure that out.. were in the Bay Area were I am from EMD is usually 5 to 10% of purchase price. So when I really wanted something I just cut a bigger check for EMD and if it was priced right a few grand higher that was the other thing that was novel to our market was an offer over ask.. I got so many by offering a mere 1 to 2k over ask it was hilarious.

    I was fully pre-qual'ed from a lender with their letter as part of the submitted offer; this was some form that I've been told is really outdated and only really used by old-school agents. I did try to up the EMD after the fact but it was too late at that point.

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  • David Malott
    Yucaipa, CA · Member since 2015 · 13 posts · 2 votes
    10y

    @Jay Hinrichs I'm sorry for my ignorance, but could you explain your acronyms?

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  • Marc M.
    OP
    Contractor · Rockville, MD · Member since 2014 · 423 posts · 135 votes
    10y
    Originally posted by @David Malott:

    @Jay Hinrichs I'm sorry for my ignorance, but could you explain your acronyms?

    EMD = Earnest Money Deposit

    POF = Proof of Funds

    PDX = I think he's referring to Portland Airport in OR

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  • Account Closed
    Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
    10y

    Marc,

    Not to rub salt on you, but when people tell me they're busy with a demanding job or whatever crap, I'd say that's an excuse for their laziness.  Guess what? They will pay for their laziness one way or another. If your life were depending on it, I bet you nickel for penny that you would have time for it.

    In my case, when I say I'm busy, it means I'm having too much fun. However, when my wife called, I'd drop everything and run as several local BP members had seen. Everything in life has a price. Prioritize them accordingly.  You have no one to blame for your life but the person you look in the mirror every morning. 

    Better luck next time.

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  • Marc M.
    OP
    Contractor · Rockville, MD · Member since 2014 · 423 posts · 135 votes
    10y
    Originally posted by @Account Closed:

    Marc,

    Not to rub salt on you, but when people tell me they're busy with a demanding job or whatever crap, I'd say that's an excuse for their laziness.  Guess what? They will pay for their laziness one way or another. If your life were depending on it, I bet you nickel for penny that you would have time for it.

    In my case, when I say I'm busy, it means I'm having too much fun. However, when my wife called, I'd drop everything and run as several local BP members had seen. Everything in life has a price. Prioritize them accordingly.  You have no one to blame for your life but the person you look in the mirror every morning. 

    Better luck next time.

    That's exactly what it was, an excuse.  I couldn't agree more and I wrote that in my original post.  I won't agree that it was "laziness" but I fully admit it was a lack of prioritization.  As I mentioned above, I could and should have made time for it.

    I don't see how you could possibly interpret that I was trying to pass blame.  Am I missing something or did you go off on some tangent?

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  • Account Closed
    Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
    10y

    Marc,

    It's just a general statement. People like to blame others for their problem. What they don't realize is that the person to blame is the person they look in the mirror every morning. Until they know the main causes of the issue, they remain stuck in the blaming game. 

    Better luck next time. 

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  • Marc M.
    OP
    Contractor · Rockville, MD · Member since 2014 · 423 posts · 135 votes
    10y
    Originally posted by @Account Closed:

    Marc,

    It's just a general statement. People like to blame others for their problem. What they don't realize is that the person to blame is the person they look in the mirror every morning. Until they know the main causes of the issue, they remain stuck in the blaming game. 

    Better luck next time. 

     I still don't understand what your "general statement" has to do with my thread. I posted about an error I made in the hopes of preventing other new investors from making the same mistake, I fully admitted to said mistake and even went as far as posting what I planned to do to make up for it. Your logic escapes me.

    Having said that, I'm certainly open to listening to anything useful you have to contribute. 

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  • Marc M.
    OP
    Contractor · Rockville, MD · Member since 2014 · 423 posts · 135 votes
    10y

    I should probably also add for clarity that I wasn't even sure the form would be necessary as I became familiar with it (apparently it's an outdated form that is seldom used these days) and it wasn't until it was too late did I realize it was the hingepin of the deal.

    Moral of that story: more paperwork is better than less paperwork. If your agent sends it to you, there's probably a reason so fill it out and even if they don't need it, at least they have it.

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  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    10y

    "The things that come to those who wait, are the things that are left behind, by those that got there first"......Me (my epitaph, and tagline on my emails)

    5Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Marc M.  yes strange transaction..   I find the banks and companies like Auction .com are somewhat frustrating to deal with and they want it their way or the highway.  ( which does not exactly go over really well with me  LOL)

    I bought 3 Auction .com deal s in Sept.. For POF I went to the bank cut cashiers checks made out to title co. memo'd the property full price on each cashiers check... took copies of them then sent them in as POF... that created a tilt.. but after running it up the flag pole they figured cash is cash and cashiers checks are cash so they accepted them as POF.

    So this month I win a few more bids and do the same thing... this time they won't accept them I tell them they did last time.. but no joy... so I had to then send them a copy of the account statement.. which is I guess what I should have done in the beginning but I wanted my deals to stand out and I thought the cashiers check would do it.... That trick has always worked with Seller's and their agents.. again.. taking my offers and moving them to the top.

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  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    10y

    That's interesting @Jay Hinrichs

    It seems like something has changed with Cashiers checks. There was a lien on a truck I wanted. I went to my bank and got a cashiers check for the payoff, which I took to the bank that held the loan. They informed me I would have to wait 3 days because it had to clear. I guess my dumbfounded look said quite a bit, because I always figured a cashiers check from a well known bank to another well known bank was as good as cash. It took a little bit of "let me talk to someone else" to get it done, but it finally worked. I thought it was just a policy at one branch or a "new person" or something.  Looks like there may be more to it and I should rethink that thought process.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Mike Cumbie  there has been a lot of fraudulent cashiers checks in the last 3 years or so.

    Most title and escrow companies will not allow them for RE closings they only accept wired funds... So that could be why my cashiers checks this time were not accepted.

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  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    10y
    Originally posted by @Marc M.:

    I don't see how you could possibly interpret that I was trying to pass blame.  Am I missing something or did you go off on some tangent?

     Marc, I can't speak for Minh but I often answer questions for the benefit of other readers not just the original poster. 

    2Reply
  • Kevin Izquierdo
    Hillside, NJ · Member since 2015 · 148 posts · 27 votes
    10y
    Originally posted by @Joe Villeneuve:

    "The things that come to those who wait, are the things that are left behind, by those that got there first"......Me (my epitaph, and tagline on my emails)

     Im in love with this.

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  • Justin B.
    Investor · Gaithersburg, MD · Member since 2013 · 659 posts · 441 votes
    10y
    Originally posted by @Ned Carey:

    Did they tell your agent that it was signed and accepted? Then you have a binding contract. 

    Ned,

    I just have to point out this is not true in case based on this he tries to take legal action.  Unless he or his representing agent actually received the signed contract back, nothing is binding.  You can argue that if you were "told" it was signed and accepted it's binding, but it all goes back to what will be upheld in court.  If he sues and goes before a judge and tells the judge he and his agent were "told" it was signed and accepted but you can't produce a document, it will get thrown out without hesitation.

    Even with the agent as a witness (the agent the seller told it was signed and accepted), without an actual document, no judge would rule in favor.  The judge has no proof that anything is truth or a lie.  It's all hearsay.

    2Reply
  • Justin B.
    Investor · Gaithersburg, MD · Member since 2013 · 659 posts · 441 votes
    10y

    Marc,

    Many times things have not gone my way, but in almost every case, a bigger and better door was opened.  When I first moved up to Maryland straight out of college from 1,000 miles away for a job, it was scary enough.  6 months after being hired, my company was bought and 95% of the employees (including myself) were laid off.  I happened to find an even better job and am WAY better off for it.  It was a scary time for sure, but even though at the time I thought it sucked, it was the best thing that could have happened to me.

    I would not be surprised if you found a much better deal and were saying to yourself, thank goodness that last deal wasn't accepted. :)

    3Reply
  • David Dachtera
    Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
    10y

    @Marc M.,

    Unless they've changed it, most RE purchase contracts spell out in their verbiage that "Time is of the essence" or something similar.

    Sitting on it that long was ill-advised, but learn that now about yourself. Next time around, be aware of it and discipline yourself to do better.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    10y

    The form Marc needed to submit was something that is not needed for the contract per se....but I understand exactly why the listing agent and the seller wanted it as I am familiar with the home and market where the offer was being made.  The price @Marc M. was going to get this house for was insanely cheap.  I mean there probably hasnt been a comp that low in the neighborhood since close to the bottom of the market 5 years ago.  And as we know a prequal letter from a lender, though absolutely needed for an offer, is worth about as much as the paper it is printed on.  So the listing agent and seller wanted a financial information sheet Im sure to gage whether they believed he had the real ability to close the transaction. They did not want to take the property off the market for $100k under list price if they did not feel he could close. While the contract may have been signed, it is not fully ratified until that signed copy is transmitted back to the buyer. The communication of the acceptance needs to happen. Technically a verbal acceptance is valid, but there is no way to prove a verbal acceptance, so the industry standard in the local market is emailing back the signed contract.

    Had the listing agent dropped the price on the MLS to what Marc was going to get for it, I have no doubt there would have been multiple cash offers for the property above that price.

    I also dont know who the listing agent was on this property as I havnt looked it up.....but I think he was going to do a huge disservice to his client by letting it go that cheaply.  If I were him, and I was about to let this go for $300k, I would have been contacting all the brokerages that work that area and getting mass emails out to them before I let it go that cheaply.

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  • Stone Teran
    Investor · Cincinnati, OH · Member since 2015 · 374 posts · 120 votes
    10y
    Originally posted by @Justin B.:
    Originally posted by @Ned Carey:

    Did they tell your agent that it was signed and accepted? Then you have a binding contract. 

    Ned,

    I just have to point out this is not true in case based on this he tries to take legal action.  Unless he or his representing agent actually received the signed contract back, nothing is binding.  You can argue that if you were "told" it was signed and accepted it's binding, but it all goes back to what will be upheld in court.  If he sues and goes before a judge and tells the judge he and his agent were "told" it was signed and accepted but you can't produce a document, it will get thrown out without hesitation.

    Even with the agent as a witness (the agent the seller told it was signed and accepted), without an actual document, no judge would rule in favor.  The judge has no proof that anything is truth or a lie.  It's all hearsay.

     I agree it wouldn't hold up in court but for a different reason.  Oral contracts are valid in almost all forms of contract law so it wouldn't just be thrown out point blank as hearsay.  BUT in real estate, most contracts are only binding on paper.

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  • Justin B.
    Investor · Gaithersburg, MD · Member since 2013 · 659 posts · 441 votes
    10y
    Originally posted by @Stone Teran:
    Originally posted by @Justin B.:
    Originally posted by @Ned Carey:

    Did they tell your agent that it was signed and accepted? Then you have a binding contract. 

    Ned,

    I just have to point out this is not true in case based on this he tries to take legal action.  Unless he or his representing agent actually received the signed contract back, nothing is binding.  You can argue that if you were "told" it was signed and accepted it's binding, but it all goes back to what will be upheld in court.  If he sues and goes before a judge and tells the judge he and his agent were "told" it was signed and accepted but you can't produce a document, it will get thrown out without hesitation.

    Even with the agent as a witness (the agent the seller told it was signed and accepted), without an actual document, no judge would rule in favor.  The judge has no proof that anything is truth or a lie.  It's all hearsay.

     I agree it wouldn't hold up in court but for a different reason.  Oral contracts are valid in almost all forms of contract law so it wouldn't just be thrown out point blank as hearsay.  BUT in real estate, most contracts are only binding on paper.

     In a general sense, yes they can be, but this is a real estate forum and this thread is about a real estate sale.  Oral Contracts don't really work in real estate transactions.  For the purpose of not throwing general statements out myself, maybe saying "throwing it out as hearsay" was a bit too general, but if you go to a judge with a real estate dispute and you can't produce a written contract, you have a VERY small chance of success.  Now, if you have several witnesses who the court knows are trust worthy, you might have a chance, but that's not the case here.  This is a real good lesson for folks here.  NEVER do a real estate deal with an oral contract.  It's just not worth it.

    Here's a quick link but you can find the same by googling.  Real estate isn't the only type of situation where oral contracts don't really apply.

    http://blogs.findlaw.com/law_and_life/2011/10/are-oral-contracts-enforceable.html

    1Reply
  • Scott Mardle
    Cleaner / Pest controller · Middle Park, Queensland · Member since 2015 · 10 posts · 3 votes
    10y

    Ah that sucks, Thanks for the tip, I will definitely remember that!

    1Reply
  • Marc M.
    OP
    Contractor · Rockville, MD · Member since 2014 · 423 posts · 135 votes
    10y
    Originally posted by @Joe Villeneuve:

    "The things that come to those who wait, are the things that are left behind, by those that got there first"......Me (my epitaph, and tagline on my emails)

     Sums it up nicely.  LOL

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