The Offer to Purchase a house explained

Ok, You found the house and now it time to make an offer. Demand for the property and your love for the house will dictate the offer you make. In this short article I’ll explain 9 different components of the offer and how they can be used to make your offer stronger. When a seller choses an offer to accept they are always looking for the best offer with the least uncertainty.

  1. Purchase Price

    • This is the total amount you are offering to the sellers as compensation for their property.

    • Purchase price (PP) is made up of the Down Payment, Ernest Money & Loan Amount

    • You can make your offer stronger by increasing the PP.

      • If you are getting a loan on the house the lender will require an appraisal. Unless you have the cash on hand your ability to increase PP will be limited by the appraisal value.

  2. Down Payment

    • This is the cash you are offering to giving to the seller at the Close of Escrow (COE). At COE you will either bring a cashiers check or wire the Down Payment (DP) plus Closing Costs (CC) to the title company.

    • You can make your offer stronger by increasing the amount of your down payment. The larger the down payment the greater the odds the deal will go through.

    • If you are getting a Down Payment Assistance loan, your down payment offer will be limited to the programs grant limit.

  3. Earnest Money

    • This is the cash you are offering to the seller to be deposited at the title company to open escrow and begin the buying process.

    • This money is refundable during the inspection period.

    • You can make your offer stronger by increasing the earnest money offer.

    • Another way to make you offer stronger is by offering non-refundable EM. In this option buyers are risking the loss of the EM if the deal does not go through. There are two ways to offer Non-refundable EM. You can offer a portion or all of the EM as non-refundable at contract acceptance. In this situation you’re basically buying the sellers acceptance. The other way to offer non-refundable EM is to offer it after the inspection period by waving the appraisal contingency. You might do this if there is a concern the house won’t appraise for the PP.

  4. Loan Amount

    • This is the amount of money you must barrow to purchase the house. To make an offer you’ll need to be Pre Qualified for a Mortgage by a Lender.

    • You can make your offer stronger by borrowing less money and putting more cash down.

    • You can also make you offer stronger by taking the next step of being Pre Approved for your mortgage.

    • There are 2 types of loans, Government backed (FHA, VA, USDA) and Privately backed (Conventional). Sellers tend to look more favorably on Conventional loans because buyers must meet higher standards to qualify and the loans have fewer obligations for sellers.

  5. Closing Date

    • As part of the offer you propose a date for the Close of Escrow (COE).

    • Typically this period is 30 - 45 days.

    • You can make your offer stronger by offering a shorter COE. If you are getting a loan, the COE will have to afford enough time for the approval process, 30-45 days.

  6. Fixtures

    • There are items in every house that belong on the house and convey with the sale, the oven and range for example. Then there is everything else that belongs to the sellers. It’s typical for the refrigerator, washer & dryer to be negotiated as part of the offer.

    • You can make your offer stronger by following what is outlined in the MLS listing information. If they aren’t offering the refrigerator in the MLS, don’t ask for it.

  7. Seller Concessions

    • At COE there are Closing Costs (CC) which the buyer is responsible to pay and CC the seller is responsible to pay. It is common for buyers to request that the sellers pay for some or all of their CC in the form of a Seller Concession (SC) to the buyer. Keep in mind the SC is money the seller in giving to the buyer out of their profit from selling the house.

    • You can make your offer stronger by limiting or eliminating the Seller Concession.

  8. Home Warranty

    • In the offer the buyer purposes: If a Home Warranty (HW) will be purchased, who will pay for it and how much it will cost.

    • To make your offer stronger the buyer can offer to pay for the HW or decline a HW.

    • It is very common for the seller to pay for the HW.

  9. Other Items to bolster your offer

    • I have found it can be helpful to write a short and sweet letter to the sellers. In the letter you include a picture, introduce yourself, compliment the house, tell them why the house would be perfect for you and thank them for their consideration. This is not necessary but can prove helpful to set your offer a part.

Our Stories are Their Stories Too

Our Stories are Their Stories Too

The last couple of months have been very busy. I produced and hosted a comedy show to benefit the Barrow Neurological Foundation. I told a story at the USA Today & AZ Republic’s Storytellers Project. I also sold 6 houses. What I did not do was write and send out my newsletter. I did actually write an April newsletter, but with everything going on I just didn’t send it out. Since I didn’t get that one in the mail, I lost some momentum in my writing life. I had been getting up early and writing first thing in the morning. Over the past couple months I started staying up late and then deciding to sleep in which stalled my writing habit. It’s interesting how momentum builds in both directions. When I was getting up early to write it felt easy, but I started to miss a day here and there. I noticed that whatever I’d done yesterday set the tone for how I’d choose to do today. After a few days of sleeping in, that was all I wanted to do. Happily, I’ve found my way back to an early morning writing routine.

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Finding Meaning in Life

Finding Meaning in Life

Last month I downloaded a sleep aid app. It’s an alarm clock app too. It uses the phone’s speakers to track your movement throughout the night. Then in the morning you get to see a graph of how you slept. I have a bad habit of staying up too late, especially after a night out telling jokes. Just having the app on my phone reminds me I need to get more sleep. I’ve been told over and over again in sales training classes “the things that get tracked get done.” As soon as I had an easy way to track my sleep, I started to take it more seriously.

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I know that guy...

I know that guy...

It’s February 2018 -- we’ve made it through the first month of the new year. January of a new year always feel like I’m finally arriving to the future. A future I’ve been waiting for since the real estate market went into its holiday hibernation. I have a bad habit of getting blue during December. There’s not a lot of business going on which gives me the opportunity to enjoy my friends and family. I’d probably be able to enjoy them more if only I wasn’t worried that there was no business going on. As December draws to a close, I’ll start to spend more and more time reliving those well worn moments from my past that I wish I could change, or I’ll dream about how glorious the future is going to be when I finally arrive. In both cases, I’m doing mental gymnastics to help me escape the anxiety which always accompanies the holiday slow down. I got a little blue this year but it wasn’t as bad as it’s been in years past.  

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Good Communication Starts With Listening

Good Communication Starts With Listening

In the Summer of 2014 I started taking improv classes. It was something that I had wanted to do for a very long time. Taking classes would mean that I’d be away from home at least one night a week. I wanted Aimee to be on board with the new schedule and classes. I also wanted to write off the expense of the classes, so I framed the class in terms of training for real estate.

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The Inspection Period Explained

The Inspection Period Explained

You’ve made an offer on a house and the seller has agreed to the terms of the purchase contract. Congratulations, you now have a house under contract! The next step is the inspection period. The inspection period is your opportunity to figure out what issues the house has. Every house has issues. That can’t be avoided. The inspection period is the first 10 days after the contract has been signed by the buyer and seller. This is your chance to decide if you do or don't want this house and all the issues that come along with it.

 

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Success happens after you've paid the full price for admission.

Success happens after you've paid the full price for admission.

We spent a week in California for the kid’s Fall break. The weather was beautiful all week. The day we were driving in, the hills surrounding Anaheim where on fire. The sky was an ominous, rusty orange color. The freeway heading east back to Arizona was closed. We arrived at the Disneyland Hotel, got checked in and headed straight for the pool. Sitting in a car for 6 hours is hard on my body. I love when the hotel I’m staying at has a hot tub to soak in. We weren’t the only Phoenicians to make the drive to Anaheim that day. Everyone in the hot tub with me was also from Arizona. We made small talk about driving through the fire. We’d all seen that the road headed east was closed. The road closure didn’t really concern me because we weren’t leaving for 5 days. The other people in the hot tub, however, were quite concerned that the road going back home was closed.

 

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I didn't set out to be a real estate agent but here's how it happened.

 

     I can remember like it was yesterday, starting my real estate business. It was 2008. We were living in a 2 bedroom apartment in Tempe. We were having our first baby. I’d spent the 5 years previous working on what I thought would be my future. I thought I was going to be a college professor. The path was clearly laid out in front of me. It was just a matter of doing the work and jumping through the hoops. I set a goal to go to Duke university to get the second masters degree that would be my key to a PHD and a professorship. The day I got the call that I was accepted to Duke was one of the best days of my life. I was ecstatic! I’d set a goal and I’d achieved it. I was going to be a Duke Blue Devil, it felt like a dream come true. It’s crazy how quickly the wheels can come off a dream once you start living the dream.  

    We packed up our lives and moved to Durham, NC. I started taking classes on this beautiful campus. Everyone back home was so proud of me. It took me half a semester at Duke to realize I’d made a huge mistake. I wasn’t cut out for the academic life. I started meeting with the different faculty members and the other students who would one day become my colleagues. I didn’t like most of them. I didn’t want to be one of them anymore. I didn’t want to spend my life split between sitting in a library for years and standing up to teach the same class year after year. I saw the system from the inside and realized I wasn’t willing to pay the price it would cost to become a successful academic. I finished my first semester at Duke but didn’t go back for my second semester. I started looking for a new story to tell myself.  

    My Father-in-law invited me to work for his sheet metal fabrication company back in Chandler, AZ. We talked about the business, and he told me he’d like me to do sales and marketing for them, once I understood the business. I was happy to have a new story to tell myself and the people around me. I’d always liked visiting Sterling’s company. There were lots of impressive looking machines. They were always making new parts. The results of the work were visible. They started with a flat piece of sheet metal in the morning, and by the end of the day it would be formed into a piece of an airplane. I was excited to go to work and help grow this company.  

    I started working in the shop at the bottom rung. I was on my feet 40 hours a week grinding and sanding the sharp edges off of hundreds and hundreds of parts each day. The work was repetitive and mind numbing. I could spend a whole day working on a stack of the same part. One after another for 8 hours, sanding and standing and sanding and standing. After 6 months, I was completely destroyed. My body couldn’t handle doing the work. I was in constant pain, on and off the job. Worse than that, I was crushed mentally. This was again not what I’d imagined it would be. I started looking for the next story to grab onto.      

    As a kid I’d been very entrepreneurial. I’d started little businesses and then organized the neighborhood kids to get the work done. My dad owned a landscape maintenance business and I was one of his best employees. Since we had all the equipment, and I had experience doing landscape work, I would go around the neighborhood and get clean up projects. The neighborhood kids and I would show up and get the work done. Sometimes I’d book a job just to send the neighborhood kids to do the work. I saw my dad doing that with his crews, so it made sense to me. I grew up working hard doing manual labor. I grew up using my body to get things done and accomplish a task. I was a blue collar kid then and still have that blue collar work ethic. I’d tried to use my brain to do work but I’d become disillusioned by the academy. I went back to using my body but my body wasn’t going to be able to do the work anymore. I needed to find something that I could do where I could primarily use my mind to get the work done, but also have personal interactions helping people with a minimum amount of hard physical labor. I settled on real estate.

    I just had the experience of marketing and selling my own house in Durham, NC. We’d only lived there for one year. Our house hadn’t appreciated enough over the course of that year to be able to afford to hire a Realtor to sell it for us. So I sold it myself and learned a lot in the process. I decided I’d get my real estate license, but I didn’t want to be a residential agent.  I didn’t want to sell houses simply because I was embraced by the stigma of the residential real estate profession. I told myself I was going to be a commercial agent. 

         It was 2008. The residential real estate market was crashing and the commercial market was contracting in a big way as businesses slowed and shut down due to the financial crisis. I talked to the commercial agents I knew. They basically all told me that starting in commercial real estate in the current environment was a very bad idea. Commercial transactions typically take much longer to close than a residential transaction, and there weren’t going to be very many transactions to go around. The commercial agents said residential would be a faster path to success, but more importantly, a faster path to earning money.   

    I was reluctant but I was desperately searching for something to do with my life. I talked to the residential agents I knew. I was told repeatedly I would need to join a brokerage that would teach me how to sell real estate after I was licensed. You learn a LOT of stuff while earning your real estate license! You learn laws, you learn how land is measured divided and subdivided, you learn what has to happen in a real estate transaction for a home to sell, but you don’t learn the most important thing -- how to find the clients!  

            I signed up with Keller Williams. They were touted as the number one brokerage when it came to education. I started getting training. The program would be easy. Everything was spelled out, I just had to do the work. I was taught that real estate is a sales job. Most realtors don’t make it because they don’t understand this. I was told to be successful in real estate I’d need to spend 2-3 hours, 5 days a week, on the phone reminding people I was now a Realtor and asking them to please send me business. I hated it, but I did what I was told. I got the scripts and started calling. I’ll bet you remember getting one of those early awkward calls from me.  

    I started my real estate at a time when people said it was foolhardy. The market was crashing! Home prices were falling fast and people were getting behind on their mortgages. People needed to sell desperately but no one had any equity to pay off the bank let alone pay a commission. There were 3 primary transactions happening in the market. Foreclosure sales, short sales and first time home buyers taking advantage of an $8000 tax incentive program. I focused on short sales and first time home buyers. I was working hard and finding success but I struggled with making my 2 hours of calls everyday. I battled myself to pick up the phone and bother people. I felt like a used car salesman. Making the calls and asking people for business wasn’t how I wanted to grow my business. I was great at working with people. I was also good at negotiating short sales. I started looking around and talking to people about other ways to get leads besides making the calls everyday.  

            I landed on the internet -- specifically on long tail google searches. I invested in websites that were optimized to show up when people searched for a specific address. For example: someone would search for 5036 N 70th St Scottsdale AZ, and my website would pop up first in the google search results. I started getting more calls and more clients in this way. I was hooked and my business was growing at a time when lots of agents were getting out.  

             Aimee and I had really regretted moving back to AZ from Durham, NC. Everything was so green and pretty in NC. We felt like we’d made a big mistake moving back to AZ. I was going to fix it! I started making plans to move back to NC and become a real estate mogul. I invested around $15K in getting my NC brokers license and setting up a new website. 

           After interviewing with a few brokerages, I settled on a Keller Williams office in Raleigh, NC. I had a company do Search Engine Optimization work on my website for the keywords "Raleigh Real Estate.”  It took about 8 months but by the time we moved to Raleigh my website “movingthetriangle.com” was appearing on the first page of google organically. I was anywhere from number 3-8 on the list when searching for Raleigh Real Estate. Showing up on the first page of google was a big deal! I was so confident! I remember knowing we were going to be rich. Our first week in Raleigh we drove around in these beautiful neighborhoods with huge houses. I told Aimee I was going to buy her one. I was sure I’d cracked the code on Raleigh Real Estate.  

           In general, the most difficult part of the real estate business is finding new clients. I was getting lots of traffic on my website and on average 25 new leads a week. I had everything I needed to be a success. That’s what I thought at least. As it turns out, I couldn’t have been more misguided. I had assumed that my skills and success in Phoenix would transfer to Raleigh seamlessly, which couldn’t have been farther from the truth. 

    The Triangle real estate market was declining but hadn’t really crashed like Phoenix. In Phoenix I primarily helped first time home buyers snatch up amazing deals inseitivied by an $8000 first time home buyer tax credit, or I helped people who were underwater on their mortgage to short sale their property. I’d figured I’d be doing basically the same thing in Raleigh.  

    The first week going into the office in Raleigh opened my eyes to my mistake. NC real estate brokers were not allowed to negotiate short sales. Only lawyers were allowed to do that. The other difficult thing about short sales in NC was that the market hadn’t crashed like it did in AZ. Not every house was underwater, so banks were far less willing to cancel the debts. I basically knew immediately the short sale game was not going to work. I turned my focus entirely on buyers.

     I spent the next 6 months trying to convert internet leads, which are notoriously difficult. Typically, 1% is the expected conversion rate for internet leads. I was getting over 100 leads a month. I figured I’d be making 1 sale a month, which was all we needed to survive. The problem I ran into was keeping track and then figuring out which of the 100 new leads was going to be the 1 that would use me to buy. I was buried in what I thought was success. I thought I was swimming in money but I was actually drowning in leads I couldn’t convert.  

             After the first month I began to realize I was in trouble. After 3 months of trying and trying unsuccessfully to convert just one of these leads, I got desperate. One thing I learned -- no one wants to work with a desperate realtor. Heck, people barely want to work with any realtor, let a lone a desperate one. I kept badgering my internet leads and also began knocking on 20 doors a day. Which I also realized was a useless way to gain to clients.  

            I met a lot of people who told me they were going to be buying or selling in the next 6 months but none of them had any intention of using a stranger who just showed up on their doorstep. These people didn’t know me and so they had no reason to trust me.  

           Affinity was something I’d overlooked. My success in Phoenix came largely from the fact that lots of people knew me and trusted me. I had roots and relationships. In Raleigh I had no roots, and thin relationships. People in the South are very welcoming and hospitable, but they’re also very guarded. Like everywhere else, they wanted to work with people they had relationships with. I was a stranger, so while they’d be polite and answer the door and my questions. They had no intention of opening their lives to me.

               I only sold 1 $40,000 house in the 12 months we were in NC. I actually sold more homes in Phoenix that year than I did in Raleigh. After 11 months of continually failing, I was done. I was so depressed. I was drinking every night. I started making plans to move us back to AZ again. It was devastating. I was a failure and a quitter. I was so embarrassed. We moved back to AZ with my tail between my legs. I didn’t want to tell anyone we were back. I didn’t want to be in real estate anymore. I wanted a new story. 

        I had a good friend give me a job working for his boutique branding company. This was going to be great! I imagined how awesome it would be to develop websites and marketing material for other people’s companies. In reality, It was much more tedious than I’d ever imagined. I also lacked the necessary design skills. I had a basic knowledge of how to use all the adobe design software, but basically only knew enough to be dangerous. I was full of ideas, but lacked the skills and ability to pull them off. After 4 months I knew this wasn’t my answer.

        The following year was a similar story. That year I took a sales job with my brother-in-law’s company selling international shipping. I wasn’t great at that, and only lasted a few months. We were broke and in a ton of debt. Even though I said was getting out of real estate it kept pulling me back in. I kept getting calls from friends; asking me to help them buy or sell. Of course help them! It wasn’t until our third year back in Phoenix that I committed wholly to real estate.  

        That was the year everything changed for me. In May of 2014 I finally said, “yes,” to a longstanding offer to go water skiing with Barrow Neurological Institute (BNI). Every summer for the past 21 years  BNI has sponsored Day on the Lake (DotL), the only adaptive water sports program in AZ. Jo Crawford, my friend & Director of Adventure for BNI, had been inviting me year after year to play at the lake. After 13 years I finally agreed and I’m so happy I did. It was my first skiing experience since my accident -- and was such an adrenaline rush!  It was amazing! I’d forgotten how much I loved that feeling. I felt alive in a new way and wanted more out of my life!

    A month later in June of 2014, still fueled by adrenaline, I got the courage to finally take an improv comedy class. Comedy was something I’d been thinking about for a long time but I was afraid to try. Getting up and performing in the first class was such a rush! I was immediately hooked. It felt like a huge part of my personality was finally switched on.

          I was beginning to feel successful again. I also realized that if I was going to be successful I was going to have to commit to whatever it was that I wanted to succeed in. I was never going to be a top producing real estate agent if I didn’t commit to doing that full time. It was that year I decided I was going to be a realtor for my career. I was going to commit and be proud of myself. That was 4 years ago. 

    Over the course of the past 4 years my business hasconsistently grown. Until this year. This year is halfway over and while I’m on track to have another good year it’s not going to be the same growth I’ve seen in the 3 years prior.  

        I can tell my business is at a plateau and the only way to begin to grow my business again is by growing as a person. I see it as an equation. If I keep putting in the same amount and same type of effort, I’ll continue to reap the same rewards -- which I’m actually quite proud of. I have grown a nice little business and while I’m very proud of what I’ve accomplish so far, I feel like I’m not reaching my full potential.  

        I recently read that people will never feel satisfied with their situation if we don’t think we’re operating at our maximum potential. Having gone through my spinal cord injury has made me realize the depth of human potential is HUGE. We can accomplish and do so much more than we tell ourselves we can.  

        I have a unique perspective because of my disability. It’s more difficult for me to move and get around but I know I can do it. I don’t feel like I have a choice. I have to provide for my family. I have to get out of bed. I have to go work. Since I struggle with the simple things people do effortlessly, I have a greater appreciation for what those things mean. For example: most people stand up, get dressed, feed themselves etc… and they have no sense of accomplishment. I, on the other hand, have to struggle with easy things, so when I get them done I feel a sense of accomplishment and gratitude. The simple ability to put food in my own mouth is a miracle. If you’ve never had everything stripped away from you, then you can never fully realize or understand the joy of getting those things back.  

        I was talking to a friend yesterday. He told me I should be satisfied with my business and I totally understood where he was coming from. I have a comfortable life. I make a good living. I get to work with and help about 20 families a year. If I keep doing what I’ve been doing I’ll probably continue to help the same number of people year after year. I could be satisfied but I’m not because I believe I can help more people. It’s disappointing to feel like your are underachieving.

         I’ve found that every time I get to the place where I think I’ve reached my top potential, that place becomes my new bottom. I can look up from there to see another level. The thing I know that other people may not is that there is always another level. We always have more potential. It seems to be our natural default to play it safe and stay comfortable. The sad thing is people can become accustomed to pretty much ANY situation. Once we feel safe -- even if the situation is truly bad -- we’ll stay there. I think it’s because we understand how to operate in that world. Even though it's bad, we know what to expect on that level. Our brain says “stay here”. Stay safe, don’t risk messing this up.  

        When I tell people about breaking my neck, most will respond by saying they wouldn’t have what it takes to go through it. That they couldn’t make it. That they’d give up. I always tell them that they would be able to make it because they’d be forced to make it. They’d have no other choice. I live on other side of a great loss. I have strived from complete physical paralysis to walk again. I’ve believed in myself and overcome odds and barriers doctors and professional said I would never be able to. I can point back to those places and draw strength and encouragement. My struggle and my weakness are one of my greatest gifts, because it’s the key to unlocking my understanding of human potential. We can accomplish incredible things if we believe we can. Living with a physical disability is a constant reminder to me of my potential. If I can get up and walk around, then I have the potential to achieve so much more! I’m so excited for the next stage of this journey! Thanks for joining me, I can’t wait to see where this path leads!