© 2011 Cengage Learning. Writing and Presenting Effective Purchase Contracts Chapter 7 © 2011...

Writing andWriting andPresenting EffectivePresenting EffectivePurchase ContractsPurchase Contracts

Chapter 7Chapter 7



RATIONALE FOR CHAPTERRATIONALE FOR CHAPTER

Choosing the right broker to work for is probably the most important decision a new licensee makes!



• This chapter illustrates the “art of selling.” • It discusses how to effectively handle the

emotions and thought processes that buyers go through when making buying decisions.



The chapter discusses many of the reasons why people buy property, and states many of the common objections made by buyers and how to handle them.

A detailed analysis of the residential purchase agreement (revised 4/10) is found in this chapter.


CHAPTER SEVEN OUTLINECHAPTER SEVEN OUTLINE

7.1 SELLING OR COUNSELING

7.2 WRITING THE RESIDENTIAL PURCHASE CONTRACT

7.3 UNDERSTANDING THE RESIDENTIAL PURCHASE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (RPA-CA)

7.4 PREPARING TO PRESENT THE OFFER TO PURCHASE


CHAPTER SEVEN OUTLINECHAPTER SEVEN OUTLINE

7.5 NEGOTIATING THE OFFER WITH THE SELLERS AND LISTING LICENSEE

7.6 SELLING YOUR OWN LISTING7.7 HANDLING SINGLE AND MULTIPLE

COUNTER OFFERS7.8 BUYERS ESTIMATED CLOSING

COSTS7.9 SETTING UP THE ESCROW TIMELINE


SELLING OR COUNSELINGSELLING OR COUNSELING

• Differences?• Types of closes that an agent may use.• Use of and differences between open-

end and closed-end questions.


WRITING THE RESIDENTIAL WRITING THE RESIDENTIAL PURCHASE CONTRACTPURCHASE CONTRACT

• Why do people decide to buy homes (security, pride of ownership, etc.)?

• Why do people decide not to buy (restricted mobility, greater responsibility, etc.).

• Mirroring and its effect on communication.


WRITING THE RESIDENTIAL WRITING THE RESIDENTIAL PURCHASE CONTRACTPURCHASE CONTRACT

• Common objections made by buyers and how to handle them effectively.

• Benefit of giving the buyers each page of the purchase agreement as you finish writing it, and asking them to read it and ask questions.


UNDERSTANDING THE RESIDENTIAL UNDERSTANDING THE RESIDENTIAL PURCHASE AGREEMENT AND JOINT PURCHASE AGREEMENT AND JOINT

ESCROW INSTRUCTION ESCROW INSTRUCTION

• California Statute of Frauds requires that all real estate contracts be in writing, except for leases of one year or less.

• Importance of clarity in a purchase agreement.


UNDERSTANDING THE RESIDENTIAL UNDERSTANDING THE RESIDENTIAL PURCHASE AGREEMENT AND JOINT PURCHASE AGREEMENT AND JOINT

ESCROW INSTRUCTION ESCROW INSTRUCTION

• The form acts as a checklist while creating a contract and this is done to ensure completeness and to protect the rights of all parties to the contract.

• Difference between a bilateral agreement and a unilateral agreement and how each affects the rights of the parties.


INITIAL INFORMATIONINITIAL INFORMATION

Information required at the top of page of the purchase contract (i.e. date, names of the parties, address and/or legal description, etc.).


C.A.R. RPA-CAC.A.R. RPA-CA

• Sub-paragraphs A through L of the financing paragraph 2.

• If a buyer makes a “cash” offer, the buyer must verify the source of his or her funds to the seller within the prescribed time or the seller can cancel the offer.



• Paragraph 3 of the Purchase Contract lists closing & occupancy details.

• Paragraph 4 is allocation of costs.



• Disclosures required in paragraphs 5; who they protect and why.

• Importance of adhering to the time limitations in paragraph 14.



• Contingent sale and its ramifications on how this type of contingency will be viewed by a seller.

• “Who, when, and how” of FIRPTA withholding.

• Limitations of earnest money deposits.



• Importance of paragraph 22 to the seller and to the agent.

• Importance to the brokers and agents of paragraph 25.

• Need for clarity when writing anything in paragraph 27.



• Statements in paragraph 30 and why they are included in the contract.

• Importance of strictly adhering to paragraph 28 by giving a copy of each document a principal signs to him or her immediately after he or she signs.



• How to handle the creation of a counter offer and how to incorporate it into the purchase agreement.

• Why is it important to have clarity in writing a counter offer.


SHORT SALESHORT SALE

• What is a short sale and what type of cooperation is required from the lender and sellers.

• Contract language that must be included in the purchase agreement to protect the rights of all parties (buyers, sellers, and lender).


PREPARING TO PRESENT THE OFFER TO PREPARING TO PRESENT THE OFFER TO PURCHASEPURCHASE

• Importance of the buyer’s agent having solid, factual data about recent property sales in the seller’s neighborhood.

• Benefits of a buyer’s agent presenting an offer in person instead of by fax (what the buyer’s agent should do to better represent the buyers when he or she is precluded from presenting an offer in person.)


PREPARING TO PRESENT THE OFFER TO PREPARING TO PRESENT THE OFFER TO PURCHASEPURCHASE

Importance of having the buyers prepared to meet with you in person after their offer is presented, and why phone presentations of counter offers are not a good idea.


NEGOTIATING THE OFFER WITH THE NEGOTIATING THE OFFER WITH THE SELLERS AND LISTING AGENTSELLERS AND LISTING AGENT

• Importance of meeting with listing agent shortly before meeting with the sellers.

• Benefit of having the listing agent present the buyer’s agent’s offer even while the buyer’s agent is present.

• Negotiation tactics including awareness of the sellers’ body language and voice inflection.


SELLING YOUR OWN LISTINGSELLING YOUR OWN LISTING

• Pros & cons of an agent selling his or her own listing.

• One party gets too pushy about receiving inappropriate information about the other party.• How would you handle it?


SELLING YOUR OWN LISTINGSELLING YOUR OWN LISTING

• Proper sequence of presenting the dual agency disclosure and election.

• Role of the Golden Rule in presenting an offer on one’s own listing.


HANDLING SINGLE AND MULTIPLE HANDLING SINGLE AND MULTIPLE COUNTER OFFERSCOUNTER OFFERS

• Be sure to have a copy of the counter offer form with you when you have this discussion.

• What to do if the buyer’s agent receives an acceptance without a counter offer (deliver immediately to the buyer).



Steps in preparing a counter offer if acting as the seller’s agent and how to best present the counter offer to the buyers in a calm, logical sequence, if acting as the buyer’s agent.



• How to represent the sellers when they have received multiple offers

• should they accept the best offer• issue multiple counter offers • or counter the offer they feel is the most

worthy • Potential for litigation and hard feelings

if multiple offers are not presented fairly and handled properly.


BUYERS ESTIMATED CLOSING COSTSBUYERS ESTIMATED CLOSING COSTS

• Issue of closing costs to the buyers’ attention.

• Giving the buyers a written estimate of their closing costs as early as possible.


SETTING UP THE ESCROW TIMELINESETTING UP THE ESCROW TIMELINE

• Duties and responsibilities of each party to the escrow.

• Differences in escrow procedures between southern and northern California.

• Does this impact the escrow timeline?

© 2011 Cengage Learning. Writing and Presenting Effective Purchase Contracts Chapter 7 © 2011...

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