MAKING THE OFFER
Real Estate Advice from Daniel Aubry
First time home buyers have an understandable reticence when it comes to making an offer. They feel they’re making a commitment when they’re actually not. An offer is never legally binding on either party- the party making the offer or the one accepting it.
An offer is merely a tool for getting to that most elusive of goals
“ a meeting of the minds.”
One of my early mentors in real estate gave me some valuable advice:
“If you’re not somewhat ashamed of the offer you’re making, “ he warned, “ you may be offering too much!”
I know seasoned investors who make as many as ten lowball offers a day. To them it’s just a numbers game. Which reminds me of the joke about the American tourist who knows only one sentence of French: “Voulez vous coucher avec moi ? “ which translates as “ Do you want to go to bed with me? “
He goes up and down the Champs Elysées, Paris’s Fifth Avenue, accosting every pretty girl he meets and trying out his limited French on them. A friend of his is curious: “How do you make out with that line? “ The friend asks.
“ Well, “ the tourist replies, “ Nine times out of ten I get slapped. But the tenth time makes it all worthwhile!”
Same with the saavy investors. If they conclude just one deal for every ten or twenty offers, they’re doing just fine. Yesterday a young couple, clients of mine, may have lost a chance at buying the house they liked because they refused to follow my advice.
We’d put in a lowball offer for the house and the seller had countered.The husband wanted to give the house another look before upping his offer. I advised him to first get an accepted offer before spending any more time on the house. I repeated my well worn argument that an offer, even an accepted offer, is never binding. But having accepted an offer the seller typically feels morally bound to go through with the sale. Even if another, slightly higher offer comes in later.
The house has a tenant who refused to give us access. Two days elapsed before I could get my client back in for a second look. By the time we upped our offer another offer had come in. We’re now going into my least favorite scenario which is having to present our “ highest and best” offer which is a total crap shoot since we have no way of knowing what the other bid is. In effect you’re bidding against yourself. And it was a totally avoidable situation.
So don’t do what my clients did.
Get your offer in fast, get it accepted and then do your due diligence. You still have plenty of opportunities to get out of the deal if you don’t like what you or the home inspector finds. Or you’ve simply changed your mind about the house.
Remember, only the sales contract is ever binding. And even with a signed sales contract your lawyer will have put in contingencies that give you a way out- the most typical one being your ability to obtain financing.
In real estate, it’s truly never over until the Closing. Or when the Fat Lady sings. Whichever happens first!
Need more real estate advice? Let me know in the comments section what you’d like to discuss about real estate in Beacon New York and Manhattan areas.