by KatieDrucker | Sep 17, 2019 | Buying Tips
If you are going to put in a backup offer, it should be an offer that makes the seller swoon.
A backup offer is an offer a buyer submits even though a property is already under contract with another buyer. If the buyer with the contract in first position terminates the contract then the backup offer would go into effect.
In Colorado, once a seller is under contract he/she can’t legally get out of it. The only way out of the contract for the seller is to try to get the buyer to terminate by not being cooperative – not negotiating with the buyer on inspection, extending dates and deadline for the buyer, etc. Therefore, a backup offer should try to incentivize the seller to not be amiable with the buyer – entice the seller to try to force the breakup, if you will.
So, how do you become a contract-wrecker with a backup offer? Submit an offer with a higher price and/or better terms than you believe the contract in first position has.
If your backup offer doesn’t impress the seller not only do your chances of getting the property not greatly increase, your chances might actually go down. A seller could use a not-so-good backup offer as a negotiating tool with the buyer they are under contract with. Once a buyer in first position knows that a backup offer is in place they tend to ask for less from the seller – making it harder for the seller to force a termination.
So should you submit a backup offer? My answer is yes, but only if you are willing to sweep the seller of his/her feet.
Good Good is a Boulder area real estate agency. We specialize in helping good people find the perfect Boulder home. We’re low pressure but high touch. If you’re looking for a real estate guide in the Boulder area, we may be a good fit. Give us a call if you’d like to chat. We’re always happy to answer any questions you have about the Boulder area or give you a tour.
Thanks,
Katie (Good Good Founder) | 720.415.4914 | Katie@goodgoodrealty.com
by KatieDrucker | Jun 4, 2019 | Buying Tips
Earnest money is collateral.
Earnest money is typically around 2 percent of the list price of a property (though this number can vary and is negotiable), is usually due 48 hours after a contract is executed and is held by the title company as collateral for the seller in case the buyer walks away from the deal.
Don’t worry, this is not as scary as it sounds at first blush.
In Colorado the real estate contract is extremely buyer friendly. There are ten possible standard contingencies in the contract. The buyer can get out of the contract at each contingency if something is not satisfactory with earnest money in tact as long as the buyer/buyer’s agent gives written notice to the seller before the corresponding contingency objection deadline.
Let’s use a real example from a deal I had a few weeks ago:
My buyer was under contract for a home with solar panels attached to the roof. Everything was going smoothly until we received the due diligence documents from the seller/seller’s agent. In those documents there was a loan document stating that about $17,000 was owed on a loan for the solar panels. And the person who took out that said loan is now serving 15 years in jail for embezzling money from the person who was selling the house. Yikes!
If the buyer did not want to take over that loan or wanted no part in this messy situation, we could have given written notice to the seller/seller’s agent that the buyer wanted to terminate the contract because of the due diligence documents.
As long as we gave that notice before the due diligence objection deadline the buyer’s earnest money would have been returned to the buyer. This is true of all the contingencies in the contract.
If a deal does close the earnest money is counted towards the buyer’s downpayment.
Have a specific buying questions, reach out – no stings attached!
Also, check out another one of our blog posts written for first time home buyers.
Good Good is a Boulder area real estate agency. We specialize in helping good people find the perfect Boulder home. We’re low pressure but high touch. If you’re looking for someone to guide you through the real estate process in the Boulder area, we may be a good fit. Give us a call if you’d like to chat. We’re always happy to answer any questions you have about the Boulder area or give you a tour.
Thanks, Katie (Good Good Founder) | 720.415.4914| Katie@goodgoodrealty.com
by KatieDrucker | May 7, 2019 | Buying Tips
An inspector is like a person spotting a landing for a buyer before he/she jumps. Therefore, inspection deadlines are some of the most crucial deadlines to be aware of in the Colorado contract.
There are three deadlines in the Colorado real estate contract for inspection: Inspection Objection, Inspection Termination and Inspection Resolution.
- The Inspection Objection Deadline in the contact is the date that an inspector or any specialists – roofer, HVAC, plumber, electrician, etc. must come out to the property to check out all the nooks and crannies. By 11:59 pm on this deadline the buyer/buyer’s agent must submit a list of what he/should would like fixed or what amount of credit at closing he/she would like in order to fix the issues found – a renegotiation request.
- The Inspection Termination Deadline is new to the contract in 2019 and is a deadline in case you do not want to object to the inspection but instead want to just bail on the contract – the landing looked too rocky or you just got too scared to jump.
- The Inspection Resolution is the deadline for the seller and the buyer to agree on a compromise based on the list submitted in the Inspection Objection. If no agreement is reached by this deadline the contract automatically terminates. If a contract falls apart it is usually at this deadline. And It is for this reason sellers pay close attention to these deadline dates when considering accepting an offer.
To have a strong offer, especially in a multiple offer situation, here are the inspection contract tricks – least extreme to most extreme:
- Tight Deadlines: A tight Inspection Objection Deadline (a few days after getting under contract) and a tight Inspection Resolution Deadline (1-2 days after the Objection Deadline) usually makes an offer more appealing to the Seller. Remember, most contracts that fall apart do so because of inspection. Sellers would rather the contract fall apart sooner rather than later so they can put the house back on the market. Before writing the offer with tight deadlines it is essential that the buyer or the buyer’s agent make phone calls to inspectors/specialists to see the earliest possible date they can come out to the property and if possible the buyer or agent should reserve a spot even before the offer is accepted. A tight deadline is not useful if no (good) inspector is able to complete it on time.
- Scratch the Resolution: Take out the Inspection Resolution Deadline in the dates and deadlines section of the contract. Essentially what the buyer is communicating to the seller is that he/she will not haggle with the seller on inspection – the buyer will either take the property at the price the buyer offered/in the condition the home is in or the buyer just won’t take the house. From most sellers’ perspectives this is great – the seller has a price locked in and/or the seller will not need to rush to get anything fixed making the process more hassle-free.
- Bring the inspector to the showing: If you can anticipate a craze over a certain property arranging for an inspector to go to the showing with you enables you to forgo putting an Inspection Objection Deadline in the contract because the buyer knows before submitting the offer if the landing is soft or hard. The risk of this option is the buyer is paying for the inspection yet doesn’t know if he/she will succeed in getting under contract.
The more you know upfront about the Boulder buying process and the tricks you might need to pull to get under contract in a tight market, the easier the process is when you jump in.
Have a specific buying questions, reach out – no stings attached!
Good Good is a Boulder area real estate agency. We specialize in helping good people find the perfect Boulder home. We’re low pressure but high touch. If you’re looking for someone to guide you through the real estate process in the Boulder area, we may be a good fit. Give us a call if you’d like to chat. We’re always happy to answer any questions you have about the Boulder area or give you a tour.
Thanks, Katie (Good Good Founder) | 720.415.4914 | Katie@goodgoodrealty.com
