Pitching An Offer Unofficially?

Question

Hi folks,

The question here is fairly simple: Is there a way to pitch an offer unofficially to gauge the seller's motivation/willingness to negotiate.

The first assumption is that it is considered unprofessional or illegal to contact a seller directly when they have a real estate agent for a property being sold. If this is not the case, obviously, that makes things a lot easier.

The longer version here is that there is a property which is listed overpriced even before investigation into it. It's a solid property in a solid location so I looked in to it anyway thinking I could negotiate during due diligence to a more reasonable price. What I've now found is that the listing information is deceptive, if not outright incorrect. To complicate things, I'd be pursuing private money to fund this deal but I don't want to waste the financial backer's time if there is no hope of a deal. SO, assuming I were to try to move forward with the property, I'd be coming back with an offer at nearly half price. I don't want to make an offer without having the money, and I don't want to try to get the money if the offer is going to fail.

So how do you pitch an offer that's not binding so that you can go to your money lender with a firm number and not waste everyone time?

Steve Vaughan · Answer

I like the LOI with 3 different scenarios.

Quick, clean and personable. Don't count out the LOI. It is a written offer so LA must present. Works for the gatekeeper agents that have you turned down or negotiating against yourself before the seller even knows you exist.

Brian Volland · Answer

@Joe Splitrock, truth be told I know I am likely wasting my time. If this property were moving fast (or likely to) I'd not have even bothered putting in the research that I have. This property is just a unique circumstance which appears to be scaring off other buyers. I can try both the "just have the realtor ask" and LOI methods but, as mentioned, I'm not expecting success. Then again, how will I know if I never ask?

Joe Splitrock · Answer

@Brian Volland I would have my agent call the other agent and just say, "My client wants to make an offer that is half what they are asking. We found some inconsistent information on the listing including details x, y, z which we feel makes the value much lower than where it is listed. We don't want to offend the seller, but at the same time we don't want to waste time writing up an offer if the seller isn't motivated." Most likely the selling agent will say that is way too low, but maybe they will give more details on the sellers motivation.

It doesn't hurt to ask, but realistically very few properties on the MLS right now will sell for half their asking price, so I question if you are just wasting your time.

Jerry W. · Answer

I have done it both ways. It seems to work best when going through the sellers agent. I have done written offers, and done verbal offers as well. The verbal is the quickest, but I believe the most effective is a written offer. I have never tried the letter of intent suggested by @Steve Vaughan, but would like to someday.

Brian Volland · Answer

I have always been a fan of the 3 offer method as it helps keep the seller from feeling trapped or defensive. I haven't tried it with a LOI yet but I'm thinking it may be time.

Sam R. · Answer

When dealing with listed buildings I do most of my negotiation before writing things down on a purchase and sale agreement. Unfortunately the negotiations are done through the seller's agent because the agent is too insecure to allow direct communication. Everything is done over email.
Once we are in agreement on terms, everything is written into a contract. Don't tie up your earnest money and force the seller to take their building off the market while you negotiate. It is a waste of everyone's time.

Chris Mason · Answer

Have your agent write the offer if you have one, or email the listing agent the offer terms if you don't. Say you're welcome to counteroffers if you are. No need to reinvent the wheel here.

Most offers at 50% of list get thrown away anyways, so don't spend too much time on this.

Brian Volland · Answer

@Ryan Murdock, putting in the offer w/ contingencies is a good way to go and will likely be what I end up doing. It does lock me in to the deal but based on conversations with other colleagues, I'm pretty sure that it's about as good as I'm going to get. Thanks

@David Sanford, the verbal is a good idea as well and shouldn't bind me to anything, but then the realtor is not bound to show the offer either. He may just sit on it and reject it since it directly effects his commission. I don't think he would, but it's something for me to consider, so thank you.

Ryan Murdock · Answer

Make your offer contingent on financing (and whatever other due diligence items you prefer). If they accept your offer, go get your money.

This is best done formally in writing but sometimes it can be quicker and easier to bounce it verbally off the listing agent / seller first to see if you're anywhere close.

Pitching An Offer Unofficially?

Pitching An Offer Unofficially?

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