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So, you’ve got buyers who have been disappointed in the past, and they need a win. They’ve found the latest home of their dreams and are ready to waive every contingency, pay any price and close tomorrow, if necessary, to make this one work.
Now, it’s up to you to put together an offer that balances market realities with the need to protect your clients. Your mission, should you choose to accept it, is to prepare an error-free contract under incredible time constraints, in a seller’s market, that still ensures your clients are protected.
Spurred from a conversation at the June Inman Connect virtual event (see video below for the full session below), which covered strategies for getting your offer accepted in a competitive market, here’s everything you need to know about whipping up a clean and eye-catching contract and what mistakes to avoid.
Biggest contract mistakes
The high-stakes real estate market that we’ve seen over the past months has created both a sense of urgency and a willingness to win at all costs that is tailor-made for bad decisions and too-fast action. This can lead to a variety of errors that would be easy to avoid in a less heated market. Here are some of the most common.
1. Leaving critical information blank
When presenting an offer package, it’s important to make sure that everything is filled out — and filled out correctly. This prevents misunderstandings and can even prevent fraud.
According to Cameron Miller of Cameron Miller Real Estate in Toronto, there should never be blank spaces in real estate contracts. “Blanks not filled in could end you in court,” he said, “or worse, make the contract unenforceable.”
Miller suggested that if there are clauses that do not apply, agents should put N/A or use a dash rather than leaving something blank. “This way, confusion will not be created and contract manipulation won’t happen,” Miller said.
2. Handwritten offers with scratched-out changes
Sometimes, either due to haste or carelessness, agents rushing to fill out contracts with a tight turnaround time may end up making changes on the fly. This can result in messy, “chicken-scratch” offer packages that make you look unprofessional and make your clients look less than appealing.
One way to avoid this is to master the mobile version of your transaction management system so that you can make changes properly no matter where you are. Rather than strikethroughs, cover changes with a new text box so that you have a clean copy of your contract elements to avoid confusion.
3. Lack of financial information
In their haste to get an offer package to the listing agent, some agents may go ahead and send along their part of the contract, following up subsequently with a lender letter, photo of the EMD check and other supplemental elements. This is not only confusing and inconvenient for the listing agent, it undermines the impact and cohesiveness of the offer itself.
Make sure that you have all of the elements of your offer in place before you send it. Reach out to the lender for supporting documentation early in the process, and make sure that you have multiple ways to contact his or her office when you’re under a time crunch.
4. DIY notes in place of standard forms or legal provisions
You may be adding elements to a contract that are not part of your standard practice, like escalation clauses or seller incentives. Talk to your broker or mentor if you have any doubts about what form to use or how to fill it out, especially if you are inexperienced with some elements of the process.
If you need help putting together the phrasing for a nonstandard provision, consult an attorney, or talk to your broker about standardized language that you should be using. Don’t try to formulate legal-sounding language for a clause or condition. Make sure your clients are covered by appropriate terms and conditions where needed.
5. Jumbled, out-of-order supporting documentation
One of the worst things you can do in a multiple-offer situation is send a PDF that is out of order, with elements included willy-nilly. It is not the listing agent’s responsibility to present your disorganized offer favorably to his or her client.
Include a cover letter with the major elements of the offer, and don’t forget to include a note to the listing agent, thanking him or her for time spent and offering to follow up with additional information if needed.
Sometimes, the biggest difference between you and your nearest competitor comes down to the way you present your offer rather than the offer itself. Make sure you make it easy for the sellers to choose your clients in this case.
Must-haves for a winning contract
To keep a leg up on the competition and help maximize your client’s chance of success, you need to make sure that every purchase process includes the following best practices.
1. Clear communication
Keep the lines of communication open with all of the players in the negotiation, including your own clients, the listing agent, the lender and any other stakeholders. If you tend to struggle with written communication, consider the services of a copywriter, copy editor or well-qualified virtual assistant who can help ensure clarity for your emails, cover letters, and other written elements.
In addition, while it is sometimes more convenient to send off a quick text or email, there are times when a phone call is a better choice. If you find yourself going back and forth with one of the parties to the transaction, hopping on a call may allow you to quickly clarify a question or sticking point.
2. Awareness of seller priorities
Understanding what matters to the seller can help you to craft a winning offer, whether they are concerned about the timeline, unsure where they’re moving next or simply seeking additional reassurance about your buyer’s intentions.
If possible, contact the listing agent to get a sense of how to prioritize the elements of your offer.
3. Robust professional network
Similarly, the more you know — and the more agents you know — the better chance you have to build rapport and glean needed information. Even when you’re busy, it’s important to maintain your professional obligations and participate in networking opportunities.
These allow you to have conversations, make connections and gain insights that can pay dividends for months or even years ahead.
Faux pas to avoid
Just as there are some best practices that are more important than ever, there are some practices that you need to avoid in today’s market. Consider the following.
1. Buyer love letters
While they haven’t yet been banned everywhere, buyer love letters appear to be on the way out. Make sure you know your state’s rules concerning these offer add-ons as well as your brokerage’s position on their use.
In most cases, sellers fielding multiple offers are more impressed with the clarity and completeness of your buyer’s financial documentation than with an emotional appeal.
2. One-size-fits-all approaches
Just because everyone in your market is waiving contingencies doesn’t mean that is the right approach for your buyers. According to Kevin Leibowitz, president of Grayton Mortgage, buyers need to approach their negotiation from their own personal financial position rather than adopting strategies that they can’t support.
“If you waive the financing contingency, can you show up and pay cash? If not, then you cannot do that,” Leibowitz said. “If you waive the appraisal contingency, can you pay the incremental difference so you can still purchase the property? If you only have 5 percent to put down, and the appraisal is 5 percent low, then it’s ‘game over.’”
3. Undermining your buyer’s position
Most of all, it is vital to remember who your client is. If you are representing buyers, it is your job to help them make smart, informed decisions that work for them, not to make the deal at all costs.
In addition, you need to remember that everything you do — from the way you communicate (or don’t communicate) with the listing agent to the way that you present the offer — is a reflection on your client and can materially affect the outcome of their negotiation.
Stay tuned: Real estate pros from across the country call out the biggest mistakes they’re seeing on offers and contracts.
Christy Murdock is a Realtor, freelance writer, coach and consultant and the owner of Writing Real Estate. She is also the creator of the online course Crafting the Property Description: The Step-by-Step Formula for Reluctant Real Estate Writers. Follow Writing Real Estate on Twitter, Instagram and YouTube.
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