Let me start by writing that offers are legally complicated. They should be done in writing but law does allow verbal offers. I have done the latter, but only in certain circumstances. There are also ways to protect your self and your money.
After you find a home you like, the next step is to determine how much to offer. It’s a bit like playing poker in the sense that you don’t know if there are other offers, what the seller is willing to take, or how badly the seller needs to offload the property. Offer too much and you leave money on the table. Offer too little (commonly known as low-balling) and somebody else swoops in and takes the property. Taking too long to decide on whether or how much to offer and the same happens. This is one of the ways where an experienced agent earns his commission. A seasoned, experienced agent will take as much of the stress as he or she can off of you, the buyer. The agent will know the market where the property is located as county-wide generalizations do not translate to specific neighborhoods or cities. There are, literally, hundreds of factors that help determine market value. These include past sales, economic conditions, seasonal factors, rarity of the property, asset condition, etc.
Once the initial offer price is determined, agents in Florida typically use what we refer to as a Far/Bar contract. This eleven-page document was created by the Florida Association of Realtors and ratified by the Florida Supreme Court. Why so complicated? In the middle and later part of the last century, there were so many land sale scams that Florida became part of joke folklore. Anyone remember the ” I have some swampland in Florida to sell you? All joking aside, it was true in too many cases. The FAR, along with the Florida legislature got together and passed laws that greatly protect the consumer. These same laws have been strengthened over the past several decades and provide a very protective umbrella over the consumer. A good agent can explain 100% of the Far/Bar to you (Of course, I am one of those agents).
After an offer is tendered to the seller (usually with some earnest money consideration), the seller has a specified amount of time to respond or the offer is null and void. many times, a counter-offer is received by the buyer’s agent. you then need to decide whether to increase your offer, meet their counter, or say thank you and walk away. If the offer is accepted, it becomes executed and is now a contract, where a new set of timeframes and milestones are set into motion.
Let me digress for a moment. These days, to make sure an offer is serious, most sellers and seller’s agents will require you submit, with the offer, a pre-qualification letter from your bank or proof of funds. The pre-qual letter states that you have been initially vetted by the bank or mortgage company and have the credit and financial ability to get the required mortgage. In the event of an all-cash offer (about 50% of all offers), the proof of funds will be in the form of a bank letter or copy of a bank statement.
Once there is a “meeting of the minds”, which, by the way, is a very legal term, these new timeframes and milestones are set into motion. They include applying for the required mortgage by a certain date, scheduling a home inspection, etc.
in summary, Real Estate transactions are very complicated and there are many pitfalls that can short-circuit a sale. A good, seasoned agent (there’s that term again) can negotiate the craters and, if possible, find a way to get the transaction completed.
If you have questions or needs, please call John Bond on his cell at 321-298-1118 or email at firstname.lastname@example.org.