Basic Steps to Buying a Home: Negotiating the Deal

Negotiation of the contract.

(This information comes from my experience as a real estate agent in the Tampa Bay Florida area and the way things work in other areas of Florida or your state may differ.)

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 it in writing. The main reasons for this are:

• a written offer leaves nothing open to misunderstandings and will cover all the terms and conditions of the offer
• If the seller accepts your offer in writing and signs it, then you have a valid contract and the seller cannot accept another offer and withdraw from yours.

If the offer is verbal and the seller accepts it, there is still the possibility that they will receive another offer that they like better until you have everything in writing and signed by them.

Florida real estate contracts must be in writing to be enforceable. This means that even if a seller agrees to all the terms of a verbal offer from you, until it is in writing and signed, they have no real recourse if they retract or change their mind.

So the bottom line is that you should submit any offer in writing to protect your interests.

In Florida, there are 2 standard forms that are commonly used to submit an offer on residential property. These forms were developed by the Florida Association of Real Estate Agents and any one of them, once signed and initialed by all parties, becomes the contract.

Again, it is best to do it with a real estate agent working on your behalf to have the entire form explained to you before signing and submitting your offer. It is in your best interest to ensure that you fully understand what you are signing, including all the terms and conditions of the offer you are making.

The only way to truly protect yourself from potential problems with a purchase is to know what your rights and responsibilities are. The important ones related to the deal are described in these standard forms and the associated forms that accompany them. And fortunately, in Florida you don’t have the extra expense of having to have a lawyer prepare the contract once an offer is accepted as in other states like New York.

Another thing to be prepared for when bidding is having the money available to make a good faith deposit. This is the money you deposit into an escrow account that shows your commitment. It also helps the salesperson feel more secure in knowing that they have something to lose if they decide to withdraw from 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 can write a check for that amount when bidding on a property.

Once all the necessary paperwork for your offer is completed, it is sent to the seller’s real estate agent (or the seller himself if he is not represented by a real estate agent). They will have a certain amount of time to accept or reject your offer or submit a counter offer. You will set the deadline for your response and they will be able to respond verbally or in writing.

From this point on, it is often more efficient to deal with any negotiation back and forth verbally as the whole process will move more quickly and result in a contract that is more readable (when you fax back and forth too many Sometimes the paperwork ends up being illegible when you’re done.)

The negotiation process is a topic unto itself, so I won’t go into that here, but I will prepare another article that covers it in more detail. However, let’s say that one of the most successful negotiation approaches for a buyer is to understand the seller’s situation and do everything possible to work with him on the points that are important to him. Of course you would do this while still getting the best possible deal for you.

The stronger your offer, the more willing the seller will be to negotiate the price. A stronger offer is one in which there are few or no contingencies, has a strong financial position, and the closing is relatively quick.

Once you have all the terms agreed to by all parties and everything is signed and initialed, you now have a contract to buy the property you want.

As of this point, much remains to be done for the deal to reach a successful conclusion or close. The phase of moving from contract to closing is covered in an article I wrote specifically on that topic.