Home Buying: Step 2b - Write offer with Agent

Comparative Market Analysis: The Price

A Comparative Market Analysis (CMA) is a report that is produced to help you to come up with the price that you want to offer for the place you want to buy (a CMA is also used for sellers to determine the listing price of their property).

The first steps are to get all the basic information on the property and to compare that against all the other similar properties on the market and in the MLS, and to get the disclosure package.

Then I call the listing agent and find out if there is anything we should know about the property that you would want to know before writing an offer on it. The agent will tell me anything that is wrong as they know that we will find out about anything in the disclosure package, and if not there we will find out about it during the inspection and then we will have problems. And we do not want any surprises or problems.

I read through the disclosure package, review the numbers and come up with a number that I think would be good. Then we consider other factors such as the market in general and for properties like this one and come up with a price that you are going to offer.

On pricing, my general goal is that if you are the highest, that it is just by a little. And if you are not the highest, that you get a counter offer, or that you actually get the place based on the Purchase Contracts Terms & Conditions. This last option has happened a number of times for our clients.

Terms & Conditions

There is an old story about two business people negotiating a deal. Finally the one says to the other, "Fine, you can name your price, but I get to set the terms!" While that is not how we do business in the world of San Francisco Real Estate, there is a lot of truth to the greater point that the 'terms' of the deal can be as important as the price itself.

Click here for a PDF of the Contract for the Sale and Purchase of Real Property

Our goal is to make the terms of the contract as strong as possible from both the financing and the contract contingency sides. We have had numerous clients who did not have the highest offer price get the property they wanted because the way were wrote the contract. And the terms made our clients overall offer stronger than another higher priced offer. How would you like knowing that someone else offered more for your place, but since we wrote a stronger offer, you got the place you wanted?!

One of the first things you will notice is that there are a lot of spaces/blanks where dollar amounts go. At a minimum you should make sure that your mortgage agent will be available when you write the offer to tell you what to put in the financing part on the first page. It would be best to get a commitment from your mortgage broker to be with you and your Realtor when you write the offer the way we do.

This will be the first thing the seller and listing agent look at when reviewing the offers. What price did you offer? How much are you putting down? How much will your first (and second) loan be and what are the rates? These change almost daily. Is there any non-contingent financing, other financing or a cash balance to be paid by borrower before the close of escrow? You can see why having a smart mortgage agent with you can be key.

After the financing part of the contract is completed, we will finish the rest of the contract making sure that we write it as strong as possible while protecting your money and options.

One thing that I do (this is only one small thing.....I am not going to give out trade secrets online, but when we go to write offers, you will find out how detailed and nuanced we will get on each item) is to schedule a tentative Property Inspection when we write the offer and then shorten the time when we will remove the Property Inspection contingency. On page 3 of the Purchase Contract, item 12. C. you have a default of 15 days to do this contingency.

Agents usually wait until after they ratify the contract before they start scheduling inspections and other things. I schedule a tentative property inspection for 2-3 days after we submit the offer. When we present the offer to the Listing Agent and/or Seller, we make sure that we highlight that we have this scheduled. Listing Agents and Sellers love it when you have this stuff lined up and ready to go. It sometimes makes them want to hurry negotiations in order to keep the schedule I think. Which is great for you.

By having the property inspection already scheduled for 2 days after we ratify, you will have more than enough time to satisfy yourself about the condition of the property in 7-10 days vs. the normal 15 days it takes when it takes an agent a week just to get an inspector to the property!

After we write the offer, we will present it to the Listing Agent.