Home > Buying a home, Supply and Demand > Should you make a verbal offer when buying a house?

Should you make a verbal offer when buying a house?

This, as most of my posts, originates from conversations with real clients.  This one comes up with some degree of regularity.

We’re going to start with my favorite, fictitious, $100,000 house.

You’ve been looking for a while and have settled on this house is your first choice – or it would be your first choice except that you can’t or won’t pay the asking price – or anywhere near it.

You and your significant other have decided that you would love to purchase this house IF you can buy it for $80,000.

So you talk to your Realtor and he says “OK, let’s make the offer.”

You reply  –“Well, we were thinking that  since it’s pretty low, perhaps you could just do a verbal offer – you know, just ask if the seller would be willing to sell for that amount before we go through all the trouble of doing paperwork, etc.”

My advice to clients at this point is simply that if you want to make an offer, we should do it formally in writing since a verbal offer isn’t really an offer.

A verbal offer is not an offer – it’s an inquiry.

A written offer is a statement: Mr Seller, I would like to buy your house. Here’s what I’m willing to pay. Here’s my signature. I’ve given my Realtor a good faith deposit, which he is holding.

A verbal offer is a question:  Mr Seller, would you be willing to accept an offer for this price?

A written offer tells the seller that you actually want to buy the house.  A verbal inquiry tells the seller that you might consider buying the house. Which do you think holds more weight?

When you proffer an inquiry, you are putting the seller in the following position. By saying yes, he knows that you might then come back and offer an even lower price, in order to test his “bottom line”.  So while it is possible that he’d be wiling to take the $80,000 offer, he has no reason whatsoever to let you know that when you haven’t made any commitment.

Making a commitment gets you a better price

Suppose you were having a yard sale. One item is an armchair which is in good shape but it has torn upholstery.  You put a price tag on it for $30.

Harry comes up to you at the sale and says “Would you take $25?” I just have to drive home and get my check book.  I’ll be back in 30 minutes.

Joe comes up and says “I’ll give you $20”.  He pulls out a 10 and two fives.

Who are you going go sell to?

You know darn well than Harry hasn’t really made a commitment.  If he does come back at all, he’d be foolish not to try an even lower price, like $15 or $20.  He already knows you’ll take $25, so why wouldn’t he want to try for an even better deal?

Pretty simple when you think about it.

MORAL: If you want to make an offer – make an offer.

Advertisements
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: