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10/27/2008 - by Dian Hymer, Inman News
The Art of Counter-offers
Why timing is so critical to completing the purchase.
Negotiation is back in style. It's not uncommon for buyers and sellers to have many rounds of counter offering back
and forth before they arrive at a contract that is completely agreeable to all involved. When this is accomplished,
the contract is ratified.
However, there is another important element involved in ratifying a contract. Until a residential purchase contract
is completely signed, and the final signed documents are delivered back to the other party or that party's agent,
the listing is not sold.
Let's say you decide to offer the sellers less than their asking price. They don't accept your offer, but issue a
counteroffer. Before you respond to the seller's counteroffer, another buyer makes an offer. If you haven't signed
the sellers' final counteroffer and delivered it back to them, they can withdraw their counter and sell the house
to someone else.
Or they could decide to withdraw the counteroffer to you and issue a new one. This time it could be a multiple
counteroffer if the sellers also decide to counter the other buyer's offer. You end up in a multiple-offer
competition, which often means paying more or not getting the house at all.
You can't rely on verbal negotiations when you're buying or selling real estate. To be binding on the parties
involved, real estate contracts and the addenda to them must be written.
HOUSE HUNTING TIP: Timing is critical. If the seller issues you a counteroffer you can live with and you want the
house, sign the document as soon as possible, even if the seller gives you several days to think about it. During
that time, another buyer could make an offer and your counteroffer could be withdrawn.
After you sign the counteroffer, make sure that your agent delivers it to the sellers or their agent immediately.
Whoever receives the document should sign to acknowledge receipt of the document so that there's no question that
the contract is ratified.
Then if another buyer wants to make an offer, you won't have to compete or risk losing the house altogether. Once
you have a ratified contract in place, the sellers can negotiate with other buyers, but only for backup position
subject to the collapse of your contract.
Don't let yourself be lulled into thinking that because the housing market is generally slow there's no chance
you'll end up in competition. The best listings -- ones in good condition and priced right for the market -- can
sell quickly, particularly in areas where the inventory is low.
Many buyers have busy work or travel schedules. Often you find the right house to buy at the least opportune time
in terms of what else might be going on in your life. Make sure that your home purchase contract states that faxed
signatures are binding. This could save you hours of driving in traffic to sign a critical document in time.
Sometimes faxes aren't the answer. If you'll be available only by phone or e-mail, consider giving power of
attorney -- one specific to buying a house in a certain area -- to someone that you trust completely. This person
should not be your real estate agent. It should be someone who will be available on short notice.
Electronic signatures are becoming more popular. But, they haven't become standard in the home-sale business. If a
seller who has had no experience with electronic signatures is considering a couple of offers -- one with
electronic signatures and one that was signed in person -- he would probably feel more comfortable accepting the
latter.
THE CLOSING: That is, unless the price on the electronically signed offer is a lot higher.
Source: http://inmannews.com
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