Sacramento Real Estate Blog

OK, you’ve gotten financing, found the home of your dreams at a price you can afford, and now you want to negotiate the best price with the seller. Your next step is to have your Realtor® submit an offer, a process we affectionately know as “writing it up”. Actually that term is a bit of a historical legacy from the days when Realtors® used to craft the offer by hand from books of boilerplate contract. These days, writing it up most often means filling out the California Asscociation of Realtors® “Residential Purchase Agreement”.

You would think that filling out a form would be a trivial matter, but as with everything, the devil is in the details. A well crafted, “clean” purchase agreement can mean a difference in several thousand dollars of savings to you. A poorly crafted one can cause you to lose money or have your offer be rejected, or cause other problems.

Every agent no doubt has their own take on the best way to craft a purchase agreement for their clients, and our individual styles vary somewhat. Furthermore, as a consumer you should understand that the terms of the agreement are all negotiable. Do you have good income and credit but no money saved? Well, then, your purchase agreement to the rescue, we’ll ask the seller to pay closing costs. Want a bargain and can close quickly? That may work, too, and we can write it up that way. So there can be quite a variation between one offer and the next, and if you have special needs, often your Realtor® can suggest ways to incorporate this into the offer somehow.

Even though all the terms of the purchase agreement are negotiable, however, many agents either explicitly or intuitively follow a path that I think of as the “Principle of Least Surprise” (you can’t Google that as far as we know, since I just made it up). The idea is this: as a buyer, chances are you want to negotiate a good price on the home. You want the price to be fair at least, or, better yet, as low as possible while still getting an accepted offer. What we like to do in this (extremely common) case is recommend that you keep the rest of the terms of the offer as “standard” as possible. The idea is that, since you’re surprising the seller and her agent on price, you want to surprise them as little as possible elsewhere in the agreement. This can help prevent the seller from feeling that you’re asking for everything and the kitchen sink, and keeps the core of the negotiation where it often legitimately belongs: the price of the home.

So, while negotiating on price, you want to keep the rest of the offer consistent with local tradition. This is actually one important reason for using an agent who is local to the area you’re buying in. (Aside from the colorful idea that we “know where the bodies are buried”). For example, in Sacramento County, sellers typically pay the full cost of the Owner’s title insurance policy, while the escrow fee is usually split 50/50 between buyer and seller. In El Dorado and Placer County, in contrast, sellers and buyers traditionally split both the escrow fee and the fee for the owner’s title policy. In the bay area, sellers and their agents are used to having all or many of the inpsections done before opening escrow, whereas here in the greater Sacramento area, the pest inspection, whole house, and other inspections are done once escrow has been opened.

Understanding how an “unsurprising” offer should look and the differences in local custom can help you and your Realtor® craft the offer that’s right for you, and help to get your negotiations with the seller off on the right foot. For this reason, you should consider selecting a real estate agent with a few years of real estate experience who’s familiar with the area in which you’re buying. Local familiarity becomes even more important later when it comes time to provide you with disclosures, but the advantages of using a local agent begin even before the purchase agreement with things like neighborhood knowledge, access to the MLS for comps, and having the area-appropriate lockbox key to make your appointments for you.