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In the previous article of this series (#3) I covered 'searching for and finding the right property for you'. In this article, I'll cover the next step, negotiating the contract, which is where the work is done to get you a deal you are happy with. 4. Negotiating the contract. Is it better to submit an offer in writing or verbally? Can you even make an offer verbally? Yes, you can make a verbal offer but it is much better to do so in writing. The main reasons for this are: - a written offer leaves nothing open to misunderstanding and will cover all terms and conditions of the offer
- if the seller accepts your offer in writing and signs it you then have a valid contract and the seller cannot accept another offer and back out of yours.
If the offer is verbal and the seller accepts it, there is still the possibility of them getting another offer they like better until you have everything in writing and signed by them. Real estate contracts in Florida must be in writing to be enforceable. This means that even if a seller accepts all the terms of a verbal offer from you, until it is in writing and signed you have no real recourse if they back out of it or change their mind. So the bottom line is that you should submit any offers in writing to protect your interests. In Florida there are 2 standard forms commonly used for submitting an offer on residential property. These forms were developed by the Florida Association of Realtors and, either of them, when signed and initialed by all parties becomes the contract. Again, this is best to do with a realtor working on your behalf so that everything in the form is explained to you before you sign and submit your offer. It is in your best interest to make sure you fully understand what you’re signing including all the terms and conditions of the offer you’re making. The only way you can really protect yourself from potential problems with a purchase is by knowing what your rights and responsibilities are. The important ones relating to the deal are described in these standard forms and the associated forms that go with them. And fortunately, in Florida you don't have the extra expense of having to have an attorney prepare the contract once an offer is accepted like in other states such as New York. One other thing you’ll need to be prepared for when making an offer is to have the money available to make a good-faith deposit. This is the money you put into an escrow account that shows your commitment. It also helps the seller feel more secure by knowing that you have something to lose if you decide to back out of the deal without a valid reason. The traditionally acceptable amount for a deposit in this area is 1% of the purchase price. So make sure you will be able to write a check for that amount when you are going to make an offer on some property. Once all the necessary paperwork is completed for your offer, it is submitted to the seller’s realtor (or the seller themselves if they are not represented by a realtor). They will have a certain amount of time to either accept or reject your offer or present a counter offer. You will set the deadline for their response and they can respond either verbally or in writing. It is often more efficient from this point on to deal with any negotiating back and forth verbally as the whole process will move more quickly and will result in a contract that is more legible (when you fax back and forth too many times, the paperwork ends up being unreadable by the time you’re done). The negotiating process is a whole subject unto itself so I won’t get into that here but I will be putting together another article covering it in more detail. However, let's just say that one of the most successful negotiating approaches for a buyer is to be understanding of the seller's situation and to do your best to work with them on points that important to them. Of course you'd do this while still getting the best possible deal for yourself. The stronger your offer is, the more the seller will be willing to negotiate on the price. A stronger offer is one where there are few or no contingencies, you have a strong financial position and the closing is relatively quick. Once you have all terms agreed upon by all parties and everything is signed and initialed, you now have a contract to purchase the property you want. From this point on there is a lot to get accomplished to get the deal to a successful conclusion, or closing. The phase of moving from contract to closing is what the next article in this series will cover. As an accredited buyer's representative, Ron has designed a special buyer-oriented website that lets you search the local MLS for Clearwater real estate and the surrounding areas. In addition, he provides a monthly email newsletter so you can stay current on how the real estate market is doing in that area. You can visit Ron's website - Clearwater Homes Clearwater Condos - and register for both MLS access and the newsletter.
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