Speaker 1: Hello, ladies and gentlemen. Thank you for coming to this week's video blog. My name is Robert Rico here at California Realty Training. Hey, thanks for coming to visit us today. We want to bring some more great information for you, particularly, of course, in the real estate field. Hope you've been doing great. Listen, today's topic, how to make a good offer, how to write a good offer. You want to be an agent? You got to make sure you're familiar with this kind of stuff, huh? Got to make sure you're familiar how to write a good offer, especially if you're planning on concentrating with buyers, because buyers want a realtor who know how to write good offers. It's not going to be a typical offer, but a good offer, an offer that's going to get what? That's right. Accepted. Right? This is how it works. As a real estate agent, you're going to hope to work with a lot of buyers in your real estate career. In my career, I've worked with tons of buyers. Of all the transactions I've done, I would say approximately 75% have been dealing with buyers. It's fun. With the buyers, it's emotional. Emotional, meaning once they get into an escrow, they really want this house. They can feel the joy. They can see the future in this house. It becomes pretty darn emotional. That being said, many a times when they see the house for the first time, they're depending on you. They're depending on you, the realtor, to make it happen, which means you got to make a good offer. It all starts with the offer. Guess what? I hate to tell you this, but they're looking at you for advice to say, hey, Mr. Realtor, what kind of offer should we make? Looking at you, eye to eye with you saying, what do you think? Now, let's talk about the basics on how to write a good offer. Let's start with the most basics of the basics. If your buyers want this house badly, I mean, they got to have it. They've been dreaming about this for years. Number one, let's talk about the earnest money deposit, the EMD, the earnest money deposit. That's the buyer putting down money to have this house taken off of the market. That's the buyer saying, hey, Mr. Seller, how you doing? Listen, I want to make you an offer, and if you accept my offer, I'm willing to give this amount of money, boom, and give it to an escrow company to take your house off of the market. Now, of course, the bigger the deposit, the more serious the buyer. Sellers like that. If you have a buyer who wants something really bad, and they're only willing to give $1,000 up, they're only willing to sacrifice $1,000, does that sound serious to you? Of course, it doesn't. Let's assume my house is $1 million, yay, we want to buy this house, it's $1 million, and the buyer only wants to put $1,000 as a deposit, no, that's not good at all. Now, typically, a really good, good deposit, a really good EMD, earnest money deposit, is 3%. Now, what's 3% of a million bucks? Do the math. Well, 3% of a million bucks is $30,000. This guy's willing to give $30,000 and put it in an escrow account. He must really want my house. This is a serious buyer. That's step one. Step two, of course, would be the sales price. The offer price. What does the buyer want to offer? Now, let's assume this house is listed at $1 million. $1 million. We'll have to decide what would be a good offer, what is not a bad offer, what offer would be completely, completely unreasonable. In my point of view, of all the offers I've made, if you want something bad enough, you better at least give what? That's right, list price. If you want a million bucks, give them a million bucks if you want it bad enough. Of course, there are other factors we have to consider. What kind of market are we in? Is it a buyer's market? Is it a seller's market? We have to consider tons of stuff. At the end of the day, when you have the whole transaction right here in front of you, there's something that they want, and they want it bad enough. If the sellers want a million bucks, what should you offer? That's right, a million bucks. Now, let's assume that this house that they really want, because you as a realtor are going to have access to all the information. Let's assume that this house that they want has been on the market for a long time. Ready? We call that D-O-M. D as in dog, O-M as in Mary. We call that D-O-M, days on the market. You as a realtor need to know what is the days on the market on this property. Say they want this house, they're asking a million bucks for it. You as a realtor will know that the days on the market is, I don't know, seven. This house has been on the market for seven days. Now, that's pretty darn fairly new. This house has only been on the market this amount of time. That's nothing. Do you think there's wiggle room to negotiate with this price? It being only on the market for seven days? Probably not. Let's retrack on the example. Let's assume that this house, which they want a million bucks, has been on the market. D-O-M. Two months. Hell, let's go worse. Let's go four months. Four months. This house has been on the market four months, no action. Now, you as a realtor, think about this. Do you think there's going to be wiggle room? Do you think these sellers are going to be willing to negotiate? They've been wanting a million bucks for four months and no one has bitten, none has gone off. Is this a good chance for the buyer to negotiate and possibly offer less? I mean, it's logic. Of course, that would be reasonable, so you come in with a lower offer, unless the buyer is what? Wanted bad enough. So, all of these you have to consider as a realtor when you're going to give your advice to the buyer. Another thing that you might want to consider to make a good offer is what we call contingencies. This is the deal when it comes to contingencies. The buyer says, okay, Mr. Seller, I'm willing to give you less price of a million dollars. I'm willing to give you 3% for the earnest money deposit. So far, so good. But I'm only willing to give this to you if I sell my other house first. I got to sell my other house first. That's called a contingency. That's called a contingency sale of my prior property. Mr. Seller, how are you? I'd like to make you this offer. I want to give you exactly what you want, a million bucks. And I want it so bad, I'm willing to put 3% down, which is $30,000. Here you go. All of this means nothing, Mr. Seller, if I can't sell my house over here first. I got to sell my house over here to buy your house. That's called a contingency. That's called an only if. That's called what I say, only if. I'll buy your house only if I can sell my house over here. Now, would a seller be attracted to an offer like that? Would a seller be willing to wait on the sideline, to wait and sit and wait, in hopes of you selling this house? I mean, what if this house never sells? Well, then he never gets his money over here. That make sense? That's called a contingency. That's a only if. I'll buy your house only if. These contingencies can bother. These contingencies can get under the seller's skin and have them say, you know what, uh-uh, your offer is just too darn ugly. Another contingency that many buyers come along, just as an example, an appraisal contingency. Hey, Mr. Seller, how are you? I'll give you a million dollars, just like you want. That's good. I'll give you a 3% earnest money deposit, just like you want. I don't have to sell my house to buy your house, just like you want, but I want to make sure this house appraises at a million dollars, Mr. Seller. Mr. Seller, this is the deal. I'm going to send an appraiser out to your house, this house that I want to buy, this house that I'm interested in. If the appraiser, whose job is to come look at this house and give me a value, this appraiser's job, and that's all he does all day long, is to come to this house and say, hey, this house is worth one million, this house is worth 950, this house is worth two, whatever it is. This appraiser's job is to come in and say, this house is worth, oh, its value is this amount. The buyer's saying, if my appraiser goes in there and says this house is not worth the million dollars I offered you, I have the opportunity, I have the right to walk away, give me back my 3%. Now, that's very typical when there's a loan involved. That's a whole other can of worms. Don't worry about it. But that's called a contingency. That's a only if. Hey, Mr. Seller, I'll buy your house only if. The less only ifs, the less contingencies we have, the more comfortable the seller, the more comfortable the seller, that means it's a good offer. You with me? These are just a few of the items you might want to remember when making an offer. Give a good earnest money deposit. Think about the price. Of course, the price is crucial. You need to base the price on the, that's right, the D-O-M. And last but not least, I want you to consider the contingencies involved. Hey, Mr. Seller, I'll buy your house, we'll make an offer on your house only if. Now, these only ifs, if they are included, you might scare the seller and the seller might say, you know what? Go away. Go find yourself another house. You with me? Good. So, you want to make a good offer? Consider all those items there.