RE Pros, do you present verbal offers? Do you need a buyer signature to present an offer?

Asked by Deborah Madey, Brick, NJ Mon Aug 27, 2007

I have had offers presented on contract form (common in NJ), offer to purchase forms completed by an agent, but not signed by the buyer, offer to purchase forms that are signed by a buyer, and verbal offers. Personally, I decline to present verbal offers and ask that the agent formalize it in writing. I will present any offer to my seller as long as it is in writing. I am unwilling to accept liability for any mistakes made by incorrectly understanding the details of a verbal offer.

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22
Jim Walker, Agent, Carmichael, CA
Mon Aug 27, 2007
BEST ANSWER
excerpt from NAR Standard of Practice Article 9 and 9-1: REALTORS, for the protection of all parties , shall assure whenever possible that all agreements related to real estate transactions....are in writing......

A cautionary tale: Buyer A made a written (low) offer through his agent on a property. The offer was countered by the seller.
Buyer A enlisted a confederate to call the lisitng agent to negotiate a price for the property by posing as a potential buyer who was unrepresented. The listing agent verbally negotiated a lower price with the posing confederate based on her false pretense that she was an unrepresented buyer and that listing agent would not have to share commission with a buyers agent.

Buyer A then used the information gleaned from his confederates subterfuge to attempt to extort the lions share of the buying agents commission as a concession in the negotiation of the sale.

The buyers agent declined to honor the kickback demand. Due to this buyers malfeasance and the listing agents gullibility and the listing agents failure to strictly adhere to standard 9.1, the buyers agent lost a potential five figure commission.

The standard allows some wiggle room as it states "whenever possible" which obviously means that the crafters of the standard envisioned that there could be unusual or uncommon circumstances that would make a written communication impossible. Due to the near universiality of email and facsimile devices, it is a rare occasion indeed in the modern world when a written communication is not possible. If the framers of the code of ethics had wanted the standard to mean "whenever convenient" or " whenever a consumer suggest doing a verbal instead of writing it is ok" they would have written it that way.
4 votes
Mr.P, , Arizona
Mon Aug 27, 2007
Two things about Arizona. One as Paul pointed out we are a non verbal state.

Two we have very relaxed Gun laws.

JR.
If I told my broker that I Presented a verbal offer and I was waiting for a fax that wasn`t signed

I am quite sure he would shoot me.
Web Reference:  http://www.nra.com
3 votes
#1, , San Francisco Bay Area
Mon Aug 27, 2007
Great question as well as a great answer. I only present written offers to my sellers. The law says an offer to be legally binding must be in writing, must have a date, be signed by a person capable of signing and must have compensation (good faith deposit.)

I have received unsigned offers from agents and I sent them back for buyers signature before I would present them. I get phone calls from agents all the time, especially in this market, asking me to run price and terms by my seller before they will "waste their time" writing an offer.

I figure these agents are just bottom fishing for their clients and I tell them to put it in writing.
3 votes
Silvia Miceli, Agent, Toms River, NJ
Wed Aug 29, 2007
Paul, thanks and I agree, the key word is present, I do not formally "present" an offer unless it is in writing. The word I used is make aware of any potential offer which could materialize. Just let your seller know there is another potential buyer who has shown "interest". This can become a sticky situation when you have a buyer who has signed and the seller has not yet. You do not tell your seller someone may pay $20,000 more. The seller thinks there are no new prospects and signs never knowing someone else may have paid more. If your seller is aware then he/she will be making the decission. There is a thin line specially if the verbal is preliminary and coming from another agent. I agree with Madey. Once you have it in writing, you present the offer.
2 votes
Paul Slaybau…, Agent, Scottsdale, AZ
Tue Aug 28, 2007
Silvia, I respectfully disagree. A verbal offer is simply not an offer. Naming a price is not an offer. Explicitly naming all of your terms is an offer. Do you really call up your sellers every time someone asks how "x" price grabs you? I've been burned too many times waiting for promised offers that never materialized to get my clients all worked into a frenzy over every bogus mention of an offer. All that does it set your client up for disappointment when the proposed offer never comes. I'll let my clients know about every single interested party, but telling them you have an offer when you really do not is just foolish.
2 votes
Amanda Curet…, , Atlanta, GA
Tue Aug 28, 2007
A verbal offer is as good as the paper it's written on, in my humble opinion.
2 votes
Jim Roth, , Chicago, IL
Tue Aug 28, 2007
Give it to me in writting or go home. I explain this to my clients up front - verbal only causes confusion about the details.... leave the fish stories to verbal dialog, protect your client and yourself - get it all in writting (the offer, disclousures, mortgage approvals).
2 votes
Melissa Manc…, Agent, Plainville, MA
Mon Aug 27, 2007
HI Deborah,

In my market, we are required to present all offers, whether they are verbal or in writing, however the statute of frauds states that no offer in legally binding unless it is in writing and includes: a date, consideration (escrow deposit), a performance deadline (closing date), all parties’ signatures, and a description of the property (the address). I explain this to agents that try to do present verbal offers, and once they are made aware of this, they usually jump to do it the right way. For those that don’t, I explain this to the seller and they typically instruct me to explain to the agent they will not respond unless it is in writing.
Web Reference:  http://MelissaBMancini.com
2 votes
J R, , New York, NY
Mon Aug 27, 2007
In my neck of LI we do use verbal offers. Most times we ask for it in writing, and an email or fax is sent by the agent, but it is not signed by the buyer. We deal in a lot of second homes, and many times the buyer goes back to where he lives before he decides he wants to make an offer. We do not do contracts or binders.
2 votes
Bruce Lynn, Agent, Coppell, TX
Mon Aug 27, 2007
Well in Texas to be valid they have to be in writing. Sometimes though if the offers are way far off the asking price, we'll run them by the agent to see if they'll be considered. Like offer of $180k on a 250K house. If it is positive we'll write it up. If not then we don't waste everyone's time. Of course there's more to the offer than price so that's why it's really just a starting point. Even what some people consider offers in writing are just a starting point. I have one investor that sends out hundreds if not thousands of faxes with a starting point and I occasionally get these. I always give them to the sellers, but most of the time they are just one page....if you will consider X for your home we'll buy it for cash type of offer. To me there's really nothing to negotiate on a verbal offer it's just a starting point.
2 votes
Paul Slaybau…, Agent, Scottsdale, AZ
Mon Aug 27, 2007
I do not present verbal offers for two reasons. 1) They are nonbinding in Arizona. 2) Price is only one piece of the puzzle.
There are too many negotiable terms that need to be addressed in an offer to do so verbally. A buyer can say he/she wants to buy a house for $500,000, but unless I know all of the other terms, it is meaningless. Do they want to close escrow in a year? Do they want closing cost assistance? Do they want a lease/purchase option? Do they have a lender qualification letter? Opening up this can of worms without documentation is foolhardy. Not only is it inefficient, but it actually has the reverse effect of damaging a potential sale. Everyone feels good about a consensus on price until they sit down to hash out everything else. The deal that everyone thought was done gets bogged down with the minutia, feelings get hurt, both parties end up feeling nickeled and dimed to death. Further, from my perspective, I a buyer is far more serious if they take the time to actually write a formal offer. A verbal offer is way too loosey goosey, and easy to back out of. Just not a good way to conduct business in my opinion.
2 votes
Sylvia Barry,…, Agent, Marin, CA
Thu Aug 30, 2007
I am in Marin, CA. Personally, I can not and will not present a verbal offer - they have to be in writing before they are binding anyway.

If the buyer’s agent insists on asking I to ask the seller, I will touch base with my seller as requested and advise the sellers that I do not recommended this and there is only disadvantage to them if they respond to the verbal offer.

There is really no upside to this. If it is a great offer, the buyers will just send it in. They only try to do verbal offer because there are big holes in the offer and they know it is low enough where the sellers might not accept the offer, so they don't want to go thru the trouble of writing it up.

And if the seller said after hearing the verbal offer that yes, they will take that low offer; you are giving away the bargaining chip. The buyers now know how low the sellers are willing to go and might come back with an even lower written offer.

If there are minor items, we might mention and agree on that verbally, but definitely not a verbal offer.

In addition, the offer has to come with a Disclosure of the Agency Relationship to identify who the representing buyers’ agent is before the agent can present and negotiate on the buyer’s behalf.

Sylvia
1 vote
Ruthless, , 60558
Thu Aug 30, 2007
I'd just like to add, for those who search this later, that there was a real life example thread shortly after this one. http://www.trulia.com/voices/General_Area/Ed_s_First_Questio…

Theory and reality are two different things just as the law or rules might be different than doing what is right or moral.

Ruth
1 vote
Deborah Madey, Agent, Brick, NJ
Wed Aug 29, 2007
Will you deliver a prepared written offer without a buyer signature? For the purpose of clearly articulating the price and terms?

As an aside, in NJ, it is common that a residential offer is actually written as a contract on the standard contract form instead of an offer to purchase. For commerical offers (including 5 or more res units), an offer to purchase form would be used since licensees may not prepare commercial contracts.
1 vote
J R, , New York, NY
Tue Aug 28, 2007
Since I'm the one who said we present verbal offers, NO we don't "present" an "offer" when someone says "do you think they'll take X". The verbal offer has terms and contingencies, and is followed up with an email or fax with everything spelled out including full names, addresses, attorneys and everything else that goes into a memo of sale.
1 vote
J R, , New York, NY
Tue Aug 28, 2007
Verbal offers being legal as will it hold up in court, no, I did not say that. Do we present verbal offers? Yes. If an offer is accepted, the memos go out to the attorneys, and the contracts go out .
1 vote
Jennifer Mon…, Agent, Charlotte, NC
Tue Aug 28, 2007
In Oregon, we can only present written offers to our clients. All offers must be in writing. I've only practiced in this state, so I am floored that verbal offers are legal elsewhere.

Considering the wide range of interpretation a poorly written contract can elicit, I can only guess at the can of worms a verbal contract might open.
Web Reference:  http://JennifersPdxHomes.com
1 vote
J R, , New York, NY
Tue Aug 28, 2007
Patrick, I wish we had to get signed binders with a deposit, too, but we don't use them either. I have asked for a good faith check on higher priced homes, when I have the buyer in front of me, but where I practice, offers are usually made verbally and followed up by fax or email. Hey we just got buyer's agency here! And we can't carry guns! Can you imagine?! In Noo Yawk!? :) -
1 vote
Jodi Strober-…, , Bucks County PA, Montgomery County PA
Mon Aug 27, 2007
If I am representing the buyers - I tell them I'd rather put it in writing, that way we get a response from the Sellers, rather than their agents' response.

If I am representing the sellers - I tell the buyers agent that we'd like to see it in writing because there is so much more to an offer than just price. We need to know all of the conditions of the offer before we can consider it.
1 vote
Thu Aug 30, 2007
Legally, an offer must be signed and in writing to be valid. Real Estate transactions require an actual written contract. If someone tries to submit an offer verbally I let them know that they need to put it in writing. With the market that Michigan is currently in I tell ALL my sellers to ALWAYS counter an offer rather than outright reject it - so there is no point in turning something down, or even commenting on it, verbally.
0 votes
Deborah Madey, Agent, Brick, NJ
Thu Aug 30, 2007
This was a very tough call on the Best Answer. Jim, of course your answer was great, and you got it over Paul by a hairline....Paul's answers were great also.

Lots of good input from lots of people and I thank all of you!
Deborah
0 votes
Silvia Miceli, Agent, Toms River, NJ
Tue Aug 28, 2007
Although in Real Estate an offer has to be in writing, as a Realtor, it is our responsibility to make the Seller aware of any offers that come in on their property. It is in their best interest to convey any offer that is told to us and they should be aware of any offer out there. It should not be decided by the agent. Until the property is fully in contract, the Seller can keep their options opened and the verbal offer may become an offer in writing.
0 votes
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