The Life (and death) of an Offer
The life of an offer really begins when a home buyer says, mostly to him or her self, “I want that house.” The next thought usually is, “Oh no, now I’m really in deep.” When the home buyer recovers, his Realtor® is standing there usually ready with approximately a dozen pages and a pen in her hand. (These days, it’s more a laptop and some printed sheets, but what the heck. The old fashioned pen in hand is a better metaphor.) The home buyer regains some co-ordination control, signs, hands the Realtor® a check and begins to pray.
But then what happens? Most home buyers, after waiting nervously by the phone for three days, hear back from their Realtor®. It’s either a “yes” or a “no” but mostly a “maybe.” So how do these responses come about? What is the process by which an offer either grows up and becomes an adult escrow or meets an untimely and sad death?
Love me or Change me!
Offers make pretty good adolescents. They are written in the youthful hope of getting accepted just as they are - one-sided and all. Full of idealism, they are created by the home buyers in the wish that the seller will settle to sell the house to them for 25% less than asking and wait patiently while the loan process works itself out. Maybe the home buyers could move in early and get a feel for the place. Maybe the seller could even repaint the house for them. That color in the master bedroom just doesn’t do it. (I know, I exaggerate. Most home buyers are not this hopeful.)
Anyway, whatever it is that the home buyer wants gets written in and signed. The Realtor® then calls the listing agent and lets him know that an offer is on its way. Most of us now like our home faxes. “Send it over!” the listing agent says excitedly, secretly hoping the buyers love the home, have paid over asking price and are ready to pay cash and move in within ten days. (Hey, no one said there aren’t crazy expectations on both sides!)
The Painful Growth
The reality of course is that the offer falls somewhere in between what both parties want. The sellers usually like the down payment but not the offer price. The buyers love the house but know that it will take a little work to get it looking like something they own and can adore. Adjustments are hard. The seller’s Realtor® (the listing agent) looks at it critically and takes it over to the sellers. While it is not the dream they were hoping for, the sellers do realize this is nonetheless a serious offer and one they can work with. They decide to counter it.
Is this the End?
Technically, when you “counter” an offer or write a counter-offer, the first one is considered dead. Which means the sellers cannot now go back and say they would like to take the original offer to escrow. However, I like to think of a counter as the maturing of an offer. The counter heads on over to the buyer’s agent over the fax again and the home buyers are finally glad to hear back from their Realtor®. They were getting tired of being excited each time the phone rang. “We have a counter,” she says. “The sellers like everything but…”
The “Everything, But…”
The counter is usually the “everything, but…” offer. And I like that, most people do, because it identifies problem areas, deal breakers, and usually the counter offers are really where escrows are made. They are the sticky areas but also general and specific things buyers and sellers eventually concede. Counters are the peacemakers, as opposed to first offers. It’s unlikely there are more than two counter offers in an escrow. I once had an almost-escrow with four counter offers, the last one asked for $500 more. At that point, you can tell no property is exchanging hands. Most reasonable home buyers and sellers will reach a conclusion with one or two counter offers.
Yes, we have a Deal!
Eventually, the “everything but” clause is worked out and both parties reach an agreement. The offer has matured and it makes a wonderful escrow. Both parties sign all documents and the offer, ready to meet the world and hold its own, is sent to a title company where every word in it is pored over and followed. The offer is now a legal document and any changes to it require the approval of both parties.
The 30 - 60 day life of an offer, albeit short, is an important one. It marks the transition between home buyer and homeowner (and a homeowner to beach / golf course retiree, perhaps?) And it shows, in however small a way, that sometimes two parties can agree for the greater good of both. And isn’t that what all business is about anyway?
