I think it depends on what you want. As far as verbal offers, I have heard of them. I don't think it's an "offer" though. I think it's just a way of seeing how the agent/homeowner reacts to the number.

a verbal offer may not be binding, but it is part of negotiating, isn't it?

In NYC, for example, ALL offers are verbal. In fact, all negotiating takes place verbally, and the contract is not written until AFTER most negotiating, esp. on price, have taken place.

In fact, our contract to buy said, in its PREPRINTED form, that we had ALREADY had the bldg inspected, examined the corporations finances and bylaws.

And esp. in an agent-to-agent conversation, this can keep you guys out of the "bad feelings" thing. Your agent can say to their agent, "i was thinking of suggesting they offer $279k. What do you think?" And their agent can say, "Let me ask them," or "I know they won't take it," based on what the sellers have told him. This gives you information about whether to pick a different number, or seriously try to offer the one you're thinking of at first.

I think you would have a better chance of having your offer accepted (or countered) if you put it in writing. A verbal offer is a very casual thing. A contract in writing has the weight of law and I think the seller is more likely to take it seriously.

I'm in a southwest suburb of Chicago, and the area I'm in is NOT experiencing the large price declines elsewhere in the country. If you're looking to buy in one of the "hotter" southwest suburban towns (you probably know what they are) and really want that house, I'm thinking you're starting out too low. In my experience in the Chicago area, homes are priced realistically and tend to sell closer to the asking price. Also, I'm surprised your agent isn't recommending putting that offer in writing. Not only is your offer verbal, it's also low, so the sellers might be a bit ticked off and refuse to respond.

When we were selling our house, our agent came to us with a verbal "low-ball" offer. Our response was "put the offer in writing" and then we'll consider it. We weren't going to outright reject the offer but we wanted to know some things about the buyers (e.g., their ability to go through with the buy).

We never got a written offer. When our agent re-contacted the buyer's agent, she admitted the listing price was out of their range and even at the low-ball level, they would have trouble getting financing.

If you're making the low offer because you can't afford the higher price, move on. If you think the house isn't worth the listing price, give it a try.

"Added an above ground pool and shed."

Unless they are a REALLY nice pool (like with lots of attractive decking around it) and a nice shed, those can actually detract value, not add value.

As was said above. There is more to a contract to purchase than just the price.
The buyers ability to purchase is part of the review by sellers of the contract, to determine dates, financials and other contingencies that might be acceptable or not.

To embellish brickeyee's post, it is worth LESS than the paper it is NOT printed upon.

Complete waste of time if you ask me, unless that is the norm in the area (sounds like it's not). Interesting to read that about NYC. If the buyer cannot even commit some time and effort to putting it on paper with a check (cough, cough, money talks) then they are not serious. Yet.

This may be regional in NYC, Talley. Here, in my experience, no one even does anything verbally. It wouldn't be considered negotiating at all. It's hard enough when everything is written down. Too much of a chance for misunderstandings with verbal information.

Gloria

NY is one of the most backward states when it comes to RE purchases. I would not hold it up as the norm.

I am in a Chicago suburb and when I purchased my home, my agent gave the sellers agent the amount I was planning to ofer verbally. He said that it was too low and that I needed to increase by $7,000 for it to be considered. My agent and I had agreed on what I would actually pay and they came to an agreement on an amount and he faxed over a written offer. The negotions took 30 minutes!

We were on the reverse end one time and would never accept anything verbal again. We made a written offer on a home for $6K less than asking. The owner was out of town and we got a call that night saying that she had accept our offer but it was verbal because she didn't have access to a fax machine to sign it. The next day one of the agents from the listing office showed the house and our offer to prospective buyer. We have proof! We get a call the next day from our agent saying they wanted us to offer full price in order to get the home. We did and they still sold it to other persons.

Be very careful of the word Verbal!

Alicia

it very much is regional in NYC. I'm just saying that nearly all negotiating takes place before anything is binding here, so it doesn't seem that weird to me that you'd make some overtures verbally before you get down to binding steps. Saves paper, probably. Increases anxiety, of course, because either party can pull out until the contract is signed.

John,
This tender concern for the pride of sellers should stop right now. This is a business deal. I have been buying and selling real estate for thirty years, and in all but the over heated market we just left, a 90% offer has been considered respectable. Make your offer - in writing - for what you think the house is worth. If the sellers want to negotiate, do so. If they dont't, move on to another house. There are plenty of them out there.

From what I have learned from this forum, the way RE is purchased in NY is completely different than anywhere else in the country.

I'd look beyond what they paid and what they are asking. (Wonder if housing has gone up an average of 7% a year in that area, though.)

What you want to know is what comparable houses have sold for in the last two months (not earlier). Is this in a development or an older established neighborhood? Boonies or in town? What is the competition? Older homes? Brand new ones? Are you set on this suburb or would another one be OK?

The above-ground pool is a nit, as is the shed. Some buyers would insist that the pool be removed.

Have they made any improvements to the house or landscaping? What is the house assesed at for tax purposes?

Ny city RE is also known as the attorneys subsidy method'.

In many places attorneys are not involvedf until settlement, and in some places they are never involved.
the most common method across multiple states is to draw up a contract and submit it to the seller. If accepted the contract is binding.
A few places besides NY city have oddball periods when a contract is under 'attorney review' and can be declared void (not technically void since a contract was never established in these places).
If you want a lawyer to look over a contract, you should take it to them BEFORE you sign and submit it.
I have purchased and sold many properties and only have my attorney involved if theings are really complicated. Otherwise you offer terms, they are accepted (or modified) and you move forward.

Terriks: From what I have learned from this forum, the way RE is purchased in NY is completely different than anywhere else in the country.

Maybe verbal offers are possible in NYC, but not in other parts of NYS. The rest of the state works with "put it in writing" otherwise it isnÂt worth the paper it is written on. One thing NYS does do is require an attorney. Imagine that!? Having legal representation for what to many, is the most expensive purchase of their life.

I really appreciate all the responses. I wanted to put in a written offer, to show we are serious, but my realtor suggested a verbal. I was a little confused. Seems like if they refuse outright it saved her the time and effort. We are pre-approved. We love the house. But I look at everything as a business/financial deal. I could care less if they are insulted. From recent comps, appreciation for the area and the age of the house we came up with a value of 285K. Thought I was coming in at a price that would leave them open to negotiating and still make over 50k in the 3.5 yrs they have resided there. I wish they never added the pool and shed! Looking at the recent existing home sales and median price decline of 3.5% y/y. I feel I can err on the side of insulting a seller rather than overpaying. Keep the great info coming.

"Imagine that!? Having legal representation for what to many, is the most expensive purchase of their life."
In most of the US, that's why you have a Realtor.

I've bought/sold houses in Indiana and Florida and always had a verbal offer and dickering over with before a final price was decided upon. I didn't realize we were as backwards as NYC--haha!

Sorry Berniek - I understand you are a realtor, but in no way do I want someone other than a real estate attorney representing my interests in a half million dollar purchase (or a hundred thousand dollar purchase, or any amount for that matter). I also would not look to a realtor to represent me in a divorce, writing my will or any other legal matter. I want someone who looks out for my best interests, who knows the law, who is legally allowed to practice law - in short, I want an attorney.

Having an RE attorney was not the norm in SoCal, where I just left. I don't know about Oregon, where I am now. But I think it makes sense to have a *disinterested* party (Realtor is not disinterested) look over the contract. We ran into problems with our buyer's agent very late in the game - a few days before closing - and the paperwork is still not complete, although the sale has been recorded and the money wired to our account. It was too late, I thought, to involve an attorney - no time, no energy (due to health problems), husband in another state. If we'd had an attorney from the start then he would have already had the necessary paperwork and been up to speed.

We will probably use one when we purchase a house here. I'll have to see what the SOP is in this area. But I think an attorney is a good idea.

Why is what the owners purchased the home for so relevent? The way I look at is that if the owners had overpaid for it, that wouldn't justify the next purchaser overpaying, so why is the seller making money that relevent?

I agree that the pool (and possibly the shed) aren't necessarily pluses to the next owner, but if someone gets a good price that doesn't mean the next owner should also.

I am not a 'wheeler and dealer', but I think that if you think the house is worth $285, you should make the offer closer to that--$282, 280...a little room to negotiate up, but not so much that you are underpricing yourself out of the market.

Even in a pure business deal, pissing off the other side isn't a great strategy.

--Beth

I'm in Oregon and it is rare to use an attorney here, though I did once when we sold FSBO. I think that you will find the real estate practices here very similar to CA. (where I used to live - you know that most of the population here is ex-Californians)

Hey terriks, I just looked at your flickr pages - nice house! You built it about a year ago? Are you pleased with how it turned out?

xamsx, no need to be sorry. I do not write wills or represent anyone in a divorcce, but I can notarize them.
However, I am the legal representative (agent) of a buyer or seller of real estate, if agreed to, and I don't have to be an attorney. (obviously with that comes the legal responsibility and liability)

Chicago was so much more casual than Oregon. We couldn't believe our realtor here wouldn't just call the other realtor during negotiations, but we had to meet, and sign each time and go back and forth (for our first house that didnt work out-we were $10K apart and the seller refused to move slightly more-took her another 3 mos to sell it and it went for about 3k over our final offer-overall a loss for the seller if she's still paying a mortgage/insurance).
I think in Chicago it's technically illegal the way they handle it but it sure helps things move along!

Berniek, you are far too close to this subject to see it objectively... and that is the entire problem with depending upon a realtor for legal advice (and I really wonder about states that allow someone to practice law without a license).

When real estate is being purchased, many questions arise concerning conflict of interest; is it in the realtorÂs best interest to see a deal go through, is merely one question. Because of how realtors receive compensation, the answer is yes, it is in the realtorÂs best interest to see a deal go through. It may not be in the buyerÂs best interest, however. Is it in a real estate attorney's best interest to see a deal go through? They get paid either way, so they are the disinterested party.

To those that say it is not "generally done" or there aren't "real estate attorneys in my area" - I'd question why it is not generally done, and there are always real estate attorneys in a state. Commercial real estate transactions use attorneys so find an attorney that deals with commercial real estate transactions. The commercial real estate attorney can either help you, or direct you to someone who deals with residential real estate.

Hey terriks, I just looked at your flickr pages - nice house! You built it about a year ago? Are you pleased with how it turned out

Thanks. I'm happy with it for the most part. Of course there are things that I would change after living here for a year, but it's always going to be that way with any house. I'm down in southern Oregon, which according to this link from the "Most expensive housing markets" thread is the most expensive housing market in Oregon. It is my theory that Californians who want to move to Oregon cross the border and stop here, raising our prices.

I agree with BethOhio, making an offer closer to what you believe the true value of the home to be would be the wiser thing to do. Unless you only want the house if it's a deal. We did that once, liked a house, but only enough to put in an offer if we could get it cheaply enough to fix up the things we didn't like. We totally insulted the owner with a low ball offer and he rejected the offer and refused to entertain any offer from us but full price. I also agree with BethOhio, it doesn't matter what the previous owners paid or how much they're going to make on the home. If they paid a $1 for the home would you offer them $2 or would you offer them the true market value, conversely if the owners had overpaid and paid $400,000 would you offer them $450,000 or would you offer true market value? The market value of the home is the important thing, not how much the previous owner paid.

In NY at least, Wills aren't notarized, they are witnessed, with accompanying affidavits of witnesses.

Anyone who buys or sells a house without at least the minimal attorney input could be in for more than a headache. JMHO after 35 years as a legal secretary.

John, if the seller did take your $273K offer he would only make about $23K on the deal, after paying the commissions. I doubt that will fly.

If your comps, etc. make you think the house is worth $285K, offer something closer to that "for starters".

If you don't want the above ground pool, put it in the contract that it must be removed and the lawn restored, or factor in the cost for you to do that.

I'm in the northern suburbs. Where in the SW suburbs are you looking? Do you live in/have a feel for that area?

I sure don't get the "verbal offer" thing, unless it is your realtor's way of telling you the low-ball is going to be counterproductive. Is she experienced in that area? (Is the commission 5% there?)

Let's just call it like it is. The realtor is being lazy. If you are making the offer in good faith, then the realtor should write it up.

verbal negotiation isn't ILLEGAL--it's just NOT BINDING. You have to recognize it for what it is.

I just sold a house in the Chicago area (northern suburbs). All of our negotiations with the buyers were verbal until we came to an agreement, which took more than a week! Honestly, it seems strange to me that anyone would go to the trouble of writing up a contract knowing full well that the first offer is not likely to be accepted and several more contracts might have to be drawn up. Sure, a verbal offer isn't binding, but even after both parties have signed a contract, it's pretty easy for either one to find a way to back out if they really want to. So, no reason not to negotiate verbally!

Garysgirl-- could you explain to me how a verbal offer would handle concessions made by the seller (are they paying closing costs etc.), earnest money (how much and how it is to be held), financing contingencies (example -- subject to securing an acceptable mortgage etc.), inspection contingencies, time and date of settlement and possession, all the inclusions or exclusions in the property (examples, drapes, appliances). Are these all part of the verbal negotiation process? I can understand where price itself may be able to be negotiated verbally, but there is so much more to an offer than price. Thank you.

We negotiated the earnest money, date of closing (but not time) and all of the inclusions verbally. Inspection and financing contingencies were not discussed, but it is pretty much a given in this area that the contract will have those. Our realtor talked to the buyers' realtor and then called us to communicate what was said. Here's how it worked:

BUYER: $285,000 purchase price, $500 earnest money, home warranty, professional carpet cleaning before closing, $2000 closing cost credit, all appliances except washer and dryer, and closing in 30 days.

US: $295,000 purchase price, $2000 earnest money, home warranty, credit at closing for professional carpet cleaning, $2000 closing cost credit, all appliances except washer and dryer, and closing in 30 days.

And so on, until we arrived at an acceptable agreement. All other details (financing, inspection, etc.) were specified in the written contract and were a non-issue for us.

well, you say to the seller: We'd really like you to pay closing costs, because that'll roll them into our loan.

The seller says, "sure, but of course that means the price will have to go up by that much"

You say, "well, actually, given the comps, we feel the price should come down by that amount."

The seller says, "this seems unfair to me, what else can you do?"

You say, "we'll pay a much bigger deposit, so you'll get more certainty"

The seller say, "OK, I see your point; OK. How much will your closing costs be? Can we pick a set amount, and if it's over that, we don't have to pay it?"

You say," Sure."

Then the seller says, "I'll need you to present me w/ a pre-approval letter, not pre-qualified, before I sign."

You say, "sure. Oh, by the way, would you consider leaving the fridge? I know it's not usually done here, but we'd really like it"

The seller says, "well, I'll have to buy a new one if I do; and that'll cost me about $1,000"

You say, "yes, but it's a used fridge, it doesn' thave that much life left in it; $750?"

Seller says, "all right, i guess. Oh, and as for the inspection--I really can't be dealing w/ lots of stupid little issues. I'm confident the roof, etc., are all good, so I'm not going to fix or mitigate anything beyond $500. I want a limit on the inspection."

You say, "well, I'll have to think about; this is sort of a big issue for me, because i really can't be dealing w/ a house that has lots of handyman problems. Let me get back to you tomorrow."

Seller says, "well, I'll think about it. By the way, i know you have kids; would you like us to leave the swingset in the backyard? We'd planned to take it, but it will be a pain."

Maybe one or more of you would make notes so you can remember stuff, and you so can plug that info into the contract once you are ready to draw it up.

Now that I see how a verbal offer and counters work, I think it's easier to have all that in writing to begin with. It's too easy (for me) to forget a point or twenty. I'll stick with written offers.

Honestly, it seems strange to me that anyone would go to the trouble of writing up a contract knowing full well that the first offer is not likely to be accepted and several more contracts might have to be drawn up.

Actually, whole new contracts do not have to be written. If the seller doesn't agree with everything in the buyer's offer they will write a counter offer that starts out something like "Seller agrees to the terms and conditions of the Buyer's offer except as modified below". If the only change is purchase price that's all that they would list, or they could change things like seller's concessions, closing date, etc. Then the buyer has a chance to accept or counter the seller's CO. So it's not an entirely new contract, but there can be several counter offers before one party accepts the other's last counter.

"Berniek, you are far too close to this subject to see it objectively... and that is the entire problem with depending upon a realtor for legal advice (and I really wonder about states that allow someone to practice law without a license)."
My job is to be objective and a commission does not make me lose my legal and ethical obligations as you suggest. IÂm not an attorney and I do not give legal advice. I give an opinion or interpretation. The first sentence of every RE document here advises the buyer or seller to seek legal advice if thatÂs what they want. In my 16 years helping buyers and sellers, no one, except in a divorce, has used an attorney, there was no need to, and itÂs generally not done here.

talley sue, are these talks between actual buyer and actual seller, or their respective agents? Are they done over the phone or in person? Are they long, drawn-out processes or are these handled in a few days?

I can see how the verbal negotiations might save time (and definitely a lot of fax paper) over written ones. On the other hand, if no one's really keeping track of who said what, there could be surprises when it's all actually on paper. "What? We never said that! You misinterpreted what we said."

I may be old fashioned, but a written offer is a whole lot clearer and a whole lot more binding, I'm sticking with written offers and leaving verbal offers to the younguns that have better memories and won't forget all the important details.

"verbal negotiation isn't ILLEGAL--it's just NOT BINDING. You have to recognize it for what it is."

a none binding agreement is WORTHLESS. It is nothing more than a wimpy negotiating tool.
If you wnat to negotiate put in writing and stand by your offer (and word).
I think th entire NY system is an insult to any reasonable person and designed soloely to enrich attorneys (and I am married to one who believes the same).
If you have an offer put the damn thing on the table and see where it goes. Playing verbal games is just that, a game.

Chiming in here. Coming from NYC suburbs, I never even knew there were written offers until I came to this forum. The buyers realtor would call the Sellers realtor to make an offer, the seller's realtor would call the seller to tell them about it, seller would tell seller's realtor if they want to counter and if there are any contingencies etc. There's a whole bunch of back and forth. Whole thing usually takes less than week. Once the "terms" are agreed to, the seller attorney drafts a contract and presents it to the buyers attorney. Attorney review usually takes approx 2-3 weeks. Either party can technically back out of the deal with no penalty until the contract is signed.

No deal is done w/o an attorney. All negotiations are verbal and then finalized in a contract. Fow some reason, closings take about 3 months. It is a terrible and backwards system- but its how its done here.

Also, its not unusual in my area (since houses are ridiculously overpriced) in a slower market to bid $20K under asking. When the market was decent, we had our house on the market for $640 and got a verbal offer for $605. We went up to $615K and the offer fell through (yes - I know it was because it wasn't written or binding). My inlaws had their house (bad market) on the market for $699K. They accepted an offer of $605K - but the housing market is dead here so they're lucky they got an offer.

To the OP, not sure if the market in your area is slow or not but I wouldn't be insulted in your offer, I think its a fair starting point. You may end up meeting in the middle at the $285 mark.

jyyanks I live in NYS and have bought and sold residential real estate in the last year. What happens at this end of the state is absolutely nothing like you described. Offers are written, closing is not 90 days (it was close to that when I bought 13 years ago). The house we bought last year closed in 32 days, the house we sold this year closed in 44 days.

90 day closing?? Wow, I haven't had a home take that long since 1977 when we purchased our first home. What takes so long? Our last few houses closed in 2 weeks, the few before that certainly not more than a month.

I think when you say verbal (that is -- in words) offer, you really mean an oral offer (one that is not in writing). Written offers are, indeed, verbal offers. Oral offers are as well. If your agent used the term verbal offer make sure you know what your agent means by that term.

If the agent does indeed mean an oral offer, then I would think that a seller would not take it too seriously. Around here, it is typical that buyers make initial offers in writing. The counter offers and negotiations are then often done orally and then the final agreement is signed. That seems to work well.

I don't know your market. Around here most houses seem to sell for around 94% to 96% of asking price and an initial offer in the 90% range not unusual at all.

I am astounded by the verbal offer idea! It sounds about as reliable and silly as the Telephone Game we used to play at birthday parties when I was nine.

It's a Realtor's job to present any offer to the seller -- ANY offer. (That means EVERY offer, even if the contract has to be amended twenty times.)