Making an offer shouldn’t be like throwing spaghetti against the wall to see if it will stick.
(Originally Published 7-08-06)
Dear Tom: We are interested in a house that has been on the market for a long time and hasn’t sold. Clearly the Seller is asking too much or someone would have bought it by now. We want to make an offer but we don’t want to waste anyone’s time. So, we thought we would just make our offer to the Seller verbally through our Agent and their Agent. What do you think? Waste Not, Want Yes
Dear Want: Except for rare instances (mostly relating to counter offers and counter to the counter offers) I am not a strong proponent of throwing verbal offers casually out into the ether of the marketplace, as though one were tossing strands of spaghetti against a wall, just to see if something might stick.
As anyone who has worked in this business long enough will tell you – talk is cheap, even if the houses aren’t. I don’t know how many times in my career, an Agent has called to say that he/she was bringing in an offer on one of my listings, only to have some sudden mysterious act of “client interruptus” take place in the form of a last minute change of heart or a debilitating attack of buyers remorse – in which case the mythical offer got hijacked before it actually ever materialized in the flesh.
I stopped telling Sellers a long time ago that we “might” have an offer coming in every time someone calls to say they are “working on something.” Too often it gets emotions worked up and adrenalin shooting through the system needlessly. There’s nothing worse than a Seller waiting in vain for their date to show up and the dance to begin – sitting all “addressed up with no place to go.”
So rule of thumb is: unless there is a bona fide Purchase Contract completely filled out with someone’s John Hancock on it staring up at me from the safe harbor of my own desk – it ain’t an offer.
It might be a dream. It might be a flight of fancy. It might be a negotiating ploy. It might be unrealized potential. But it ain’t an offer.
As a Buyer there’s another angle you might want to consider. By making a verbal offer, you could be selling your own interests figuratively short if you are really trying to convince the Seller of a property that has been on the market for a while to sell his/her interests literally short.
Think about it! When you tender a verbal offer, you are in effect saying to a Seller: “If I were to hypothetically think about writing an offer on your home somewhere in the range of some price, how do you think you would hypothetically respond to such an offer, were I to actually make it?” Hardly compelling stuff, is it? Specially for a Seller stuck in the morass of their own mind-set.
I guarantee you that as long as Sellers are thinking about the prospect of selling their property on a purely hypothetical basis, rather than a real one, the vast majority are going to revert back to the same conceptual set of expectations that convinced them to overprice their property in the first place.
There is only one way to transition your interest and their dreams out of the realm of the hypothetical and into the real. Put your offer in writing. Make it appear on their dining room table. Force them to review its terms and conditions in a way that requires them to do some actual soul-searching and confront their own presuppositions.
A real written offer alters the internal process of even the most recalcitrant Seller. It says to them that the whole ordeal can be over if they just agree to sign on the bottom line. And that is compelling to someone who is tired of living in the fish bowl of the marketplace.
This isn’t to say, of course, that you can write any offer at any price and expect Sellers to immediately cave in and hand you the keys and the deed to their property. What it hopefully means is that you can create an opportunity to get your foot in the door and begin a dialogue about acceptable price and terms without getting it slammed shut abruptly in your face.
Talking the talk isn’t enough. You’ve got to help the Seller walk the walk and do the difficult work of coming to grips with their own deflated expectations. Don’t worry about wasting anyone’s time. It should only take your Agent 20 minutes to write up the Purchase Contract assuming you have a reasonable sense of what you want to offer. The Seller has already wasted much more of their own time than you ever could.