How to Submit a Low Offer on a New York Listing
What is more compelling to someone selling a home when presented with an offer on their property:
- A voicemail or
- A well written offer sheet complete with a cover letter, proof of funds, pre approval and specific terms
If you are like me, you'll choose option two. So let me ask a question: If a well presented, full package is more convincing, would it not be especially wise when the offer is low? Would a low offer not need even more justification and clarity? Would a seller not ask questions about the offer if there were a germ of interest in negotiating that concrete answers would greatly help? And if the answers are "they didn't say" will the seller be less or more likely to dismiss the low offer as ambivalent speculation?
In this busy spring season, I have been asked to present by buyers and been presented by colleagues on my listings, LOTS of low offers. The company has 60 listings and it is April. Do the math.
And yet, on the vast majority of the "low" (i.e., more than 10% off list price) offers we have received, they haven't even bothered to submit anything in writing! Nothing! Cash offers with no proof of funds! Nada! Bubkus! Three in the past week were voice mails!
To my friends outside of New York, I should add that contracts here are not broker-prepared. We have a memo system, the efficacy of which is another article entirely. A memo-style proposal on company letterhead with clear terms is considered thorough.
So to my colleagues locally who are experiencing the same thing I am getting from buyers, which is a desire to pay as little as possible and then some, here are the things I need for a lower offer to be considered seriously:
- A cover letter introducing the buyer client
- A completely filled out offer sheet with clear terms on company letterhead. IN my market that means price, downpayment, type of loan, LTV specified, closing date, and attorney contact information.
- Pre approval letter from a bank with the good sense to have their compliance verbiage visible (you'd be surprised how many do not do this and how awful that looks. How can they underwrite a file if they can't handle their statutory disclosure?)
- Disclosure of agency representation- for whom the agent represents. In New York, a selling agent can be a buyer agent, a broker agent, or a sub agent. Do tell.
If the offer is cash or owner financing (I have some listings that offer seller financing), here are some other absolutely necessary items:
- Proof of funds
- If proposing owner financing, a credit report with FICO score
- Amortization, payments, proposed interest and maturity timeframe if applicable. Seller financing often has a balloon payment after 2-5 years. TELL ME THIS.
Professional negotiations are not throwing mud on the wall, they are business. And how you deliver the information is crucial. If you want serious consideration, you have to submit a serious offer. I might add that no matter who you represent, lame offers are bad advocacy. The argument against taking the time to write up a complete offer is often stated as " I don't want to waste time." This is a fallacy. The big waste of time is making an agent deal with an offer that is constructed to be dead on arrival.
Buyers who are making low offer should insist on giving their offer the best chance of serious consideration and be presented as if they are competitive. Insist that your agent does their job so I can do mine.