Verbal Offers are Terrible Advocacy

By
Real Estate Broker/Owner with J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY

Unlike most of the US, in Westchester and the surrounding areas of New York real estate contracts are prepared by attorneys only after a process of offers, inspections and due diligence. Other than mortgage, contracts are non contingent. There is not even a deposit of any kind until contracts are signed. It is not at all unusual for an accepted offer to wait 2 weeks for fully executed contracts. 

Most of the time, therefore, offers are submitted on company letter head with terms specified and accompanied by a pre approval. The more specificity, the better. Sellers are rightly very reticent to accept any offer without assurance of the buyer's ability to perform, especially since we are required to disclose an accepted offer per the code of ethics even with nothing signed

Every so often, I get an offer from an agent over the phone. They say they are buyer agents, but I really don't see how a verbal offer, without clear terms and a pre approval, sheds the best light on the buyer's ability to perform. If anything, it makes the agent seem indifferent and the buyer either unforthcoming or uncooperative. 

The old rationale that "I don't want to waste my time writing up an offer if it isn't going anywhere" is ironic- the best way to make sure an offer goes nowhere is to make a halfhearted, verbal offer with a mystery buyer. If you want to make that sale, you have to do work- it isn't a waste of time, it is your job. 

I wish I had a nickel for every time this has been said in our industry, but it has never been more relevant than now: put it in writing. 

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Rainer
83,450
David Artigliere
Reading, Pottstown, Norristown, Philadelphia - Collegeville, PA
ARTI Home Inspections, ASHI Certified Home Inspector

If the buyer can't put the time into a written offer, they are not serious about the purchase and probably wasting their agent's time.  It's good to make them understand that real estate transactions must be in writing to prevent confusion and give both parties the full picture.

Feb 04, 2011 11:49 PM #38
Rainer
247,026
Frank Castaldini
Coldwell Banker - San Francisco, CA
Realtor - Homes for Sale in San Francisco

If it's verbal it's not worth the paper it's written on.

Feb 05, 2011 01:16 AM #39
Rainmaker
654,112
Evelyn Kennedy
Gallagher & Lindsey, Alameda, California - Alameda, CA
Alameda, Real Estate, Alameda, CA

Phil:

An offer must be in writing in California.  Otherwise, how does one know all the terms and conditions of the offer. 

Feb 05, 2011 02:02 AM #40
Ambassador
901,133
Margaret Woda
Long & Foster Real Estate, Inc., Crofton, MD 21114 - Crofton, MD
Maryland Real Estate & Military Relocation

My reply... "Put it in writing."  There is nothing to negotiate, in my opinion, unless we have the buyer's commitment to terms.

Feb 05, 2011 07:34 AM #41
Rainmaker
510,812
Mitchell J Hall
The Corcoran Group - Manhattan, NY
Lic Associate RE Broker - Manhattan, NYC

Phil, As you know, a written offer is not a contract in NY. Neither party has any legal obligation to the other party until there is a fully executed contract.

Having said that, I still require buyer/brokers to submit the REBNY offer form for my listings. I send them the form to fill out and return if they don't submit it with offer.

Required Information: Amount of offer, terms, (financing contingency if any, amount, pre approval letter), anticipated closing date, buyer's employer and legnth of employment, buyer's annual income (current and last year) liquid assets excluding pension, annual debt, net worth and attorney contact info.

For coops the buyer must submit a signed REBNY financial statement along with the offer form. While the offer and counter offers are not legally binding, once an offer is accepted and contract executed for a coop purchase, the signed REBNY financial statement will protect the seller.  If the buyer made any misrepresentations or omissions on the signed financial statement submitted with their offer and they are turned down by the coop board, the seller may be able to keep the 10% deposit.

 

Feb 05, 2011 08:01 AM #42
Rainmaker
717,876
Jackie Connelly-Fornuff
Douglas Elliman Real Estate in Babylon NY - Babylon, NY
"Moving at The Speed of YOU!"

Hi Phil, I send all offers in writing. Then I call the agent to give them a heads up that the offer is being faxed. Then I call so make sure it was received. And you are right, it's not unusual to get into contract 2 weeks after an offer is accepted.

When I get calls for a verbal, I tell them it has to be faxed or emailed, period. If not, I do not consider that offer real.

Feb 05, 2011 08:57 AM #43
Rainmaker
893,629
Michael Setunsky
Michael's Commercial LLC - Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Phil, this is good advice. If it isn't in writing, it isn't an offer in my opinion. In my business I use a Letter of Intent to get an offer down on paper. Its a great way to start the negotiating process.

Feb 05, 2011 09:33 AM #44
Rainmaker
87,937
Scott Petersen
Client First, Realtors - Canton, MI - Canton, MI

I am dealing with a Seller that wants to negotiate verbally after submitting an Offer To Purchase. The Listing Agent keeps calling countering the offer, and I keep asking him to put it in writing back to me and I will present. I am not making any progress with getting it in writing, which leads me to believe that the seller is not serious.

Feb 05, 2011 10:15 AM #45
Ambassador
1,293,657
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale - San Jose Probate Agent

J. Philip The old rationale that "I don't want to waste my time writing up an offer if it isn't going anywhere" is ironic- the best way to make sure an offer goes nowhere is to make a halfhearted, verbal offer …If you want to make that sale, you have to do work- it isn't a waste of time, it is your job.” I get these calls from agents all the time. They tell me what they want to write an offer for … and ask if seller will accept it. Or, ask if the lender will accept it when the property is a short sale. I tell them … write your highest and best offer and we will see what we can do with it. Typically … those agents don’t write … they are simply too lazy to put in the time.

Feb 05, 2011 10:17 AM #46
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Erica Ramus
Erica Ramus - Ramus Realty Group - Pottsville, PA - Pottsville, PA
MRE, Schuylkill County PA Real Estate

I am with you Phil. I hate verbal offers! I recently told a new agent that she had to write it up and she was so clueless it was dangerous. She said "just tell the seller the number." I replied okay, and what is the type of lending, how much down, any inspections? She said the buyers just wanted to run the number past the seller. She did not understand that TERMS are also important! 

Oh and that written offer never did show up

Feb 05, 2011 11:01 AM #47
Rainer
136,154
Brent & Deb Wells
RE/MAX Four Corners - Prosper, TX
Your Collin County Realtors

J. Philip,

I have been sitting here rewriting my response for 10 minutes and I am now giving up. I can't seem to say anything nice about these types of phone calls. They are a waste of time to a listing agent. I am obligated to take EVERY offer back to my clients, but a verbal offer is tenuous at best. If its not on paper, I can't accurately convey it to my clients.

-Brent

Feb 05, 2011 11:06 AM #48
Rainmaker
99,589
Mary Ann Daniell, Realtor Killeen Fort Hood Texas
Coldwell Banker United, Realtors - Killeen, TX

I get the rare verbal offer and always pass it on to the seller after asking the buyer agent to send over the offer in writing.   Verbal offers are just a buyer's fishing expedition  and are usually very low, with no intention of ever writing a real offer.   As a side note, I can not imagine working under the New York system!  We get inspections done, transaction closed and the buyers moved in to their homes within two weeks sometimes!

Feb 05, 2011 11:37 AM #49
Rainmaker
159,876
Howard and Susan Meyers
The Hudson Company Winnetka and North Shore - Winnetka, IL

The practice in the Chicago and suburban area is for all offers to be presented on written contracts provided by the local MLS boards.  However, it is common practice to present counteroffers verbally...and they are binding.  When final terms are reached, the original contract is amended with changes from the original offer initialed by both buyer and seller.  The contract is considered "fully executed" when all initials and signatures have been completed and a copy of the signed contract is delivered to both the buyer and seller.  These contracts with cross outs and amendments are often very difficult to read....but they sure beat a verbal offer with nothing in writing to present to the seller!

Feb 05, 2011 11:45 AM #50
Rainer
122,248
Cory Barbee
San Diego, CA
Broker (760) 563-4022

I don't mind verbal offers over the phone as long as I am able to communicate between my client and the other agent quickly.....once done...then go to paper...really depends on the skill level of the agent on the other end of the deal and if they communicat with their clients well...

Feb 05, 2011 11:56 AM #51
Rainer
99,399
Dave Leiderman
Coldwell Banker Residential Brokerage - Ocean City, MD
ABR, SFR - Realtor - DE & MD Beaches

Being that I'm the 52nd comment there probably isn't much more that can be said.  Please forgive me if I'm repetitive.  I suppose I'm in agreement with the gentleman before me.  I don't mind a verbal offer but I always caution the agent that it has no legal bearing and if they're serious, they need to be prepared to put something in writing.  I think in a way, it doesn't do our Sellers justice to fully disregard an offer just because its not written.  Now if we, as the listing agents, put all our eggs in the one basket that is the verbal offer then we are not working in the best interests of our clients and clearly not professional.

Feb 05, 2011 02:45 PM #52
Rainmaker
558,669
Chris Olsen
Olsen Ziegler Realty - Cleveland, OH
Broker Owner Cleveland Ohio Real Estate

Hi Phil -- After reading your first sentence...are you saying inspections are done before an purchase agreement is reached?  Just curious how it works there in NY.

Feb 05, 2011 05:09 PM #53
Rainmaker
511,597
Patricia Aulson
BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate - Exeter, NH
Realtor - Portsmouth NH Homes-Hampton NH Homes

All great points made here today.  I enjoyed the read.  I've had this happen now and again and always tell them unless it's written, with terms, etc. and signed then is means nothing.  Get me the offer in writing and I'll see what I can do for your buyer.

 

Patricia/Seacoast NH & ME

Feb 05, 2011 05:25 PM #54
Ambassador
1,563,910
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 800-610-7253 DRE01267479 - Costa M

I prefer to have everything in writing.  Maybe it's the attorney in me, but it's the only way that it really makes sense.

Feb 05, 2011 05:59 PM #55
Rainmaker
358,868
Sylvie Stuart
Keller Williams Check Realty 928-600-2765 - Flagstaff, AZ
Home Buying, Home Selling and Investment - Flagstaff, AZ

Great post! I completely agree. It is our job and it definitely needs to be in writing!

Feb 11, 2011 05:56 PM #56
Rainer
18,608
Erika C. Harris
First United Realty - Douglasville, GA

Is there really a such thing as a serious buyer with a verbal offer?

Feb 13, 2011 08:59 PM #57
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Rainmaker
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J. Philip Faranda

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