Has someone tried to give you a verbal offer on your home for sale? Have you as a buyer been tempted to submit a verbal offer, just to test the waters?
Be advised: A verbal offer is only worth the paper it’s written on.
That’s right – there’s no paper, so it’s worth nothing.
A verbal offer is just talk. If the seller answers, that’s just more talk. Neither buyer nor seller is legally bound to follow through with the numbers suggested.
It’s an especially bad idea for sellers, because their prompt verbal acceptance could cause a prospective buyer to think they offered too much, so when they get around to writing a legal offer, the price could be lower. In addition, without documentation, the seller has no idea whether the buyer has been pre-approved for a loan, has the money in the bank, or is just wishing out loud.
Aside from not being legally binding, a verbal offer is worthless because it contains no details. Price is only one of the factors in a true offer to purchase real estate.
What are some of the other details?
- Will this be cash or require a loan? If a loan, what kind of loan? And, is the buyer pre-approved?
- How much earnest money has the buyer deposited? (What’s his risk if he fails to close?)
- Is the buyer asking for seller concessions? For instance, does the buyer want the seller to pay some or all of the buyer’s closing costs? Does he want the seller to pay for the inspections? Does he expect the seller to have new roofing installed?
- Is the buyer asking for something the seller didn’t intend to leave with the house? For instance, the washer and dryer, or perhaps the riding lawn mower.
- What dollar amount did the buyer enter for a repair allowance following the inspection?
- Has the buyer included contingencies, such as money coming in from a settlement or the closing of a home they have for sale?
- What’s the closing date?
- What’s the expiration date on the offer?
As you can tell, many of these things greatly affect the seller’s bottom line, so an offer for $X can turn out to be $X minus several thousands of dollars.
In many states, agents are legally required to inform their sellers of verbal offers.
That means that you as the seller must come back with your own verbal reply: “Put the complete offer in writing and I’ll consider it.” That is, unless it’s so ridiculously low that you wouldn’t waste time reading it. In that case, a simple “No” will suffice.
If you’re the buyer…
Making a verbal offer for a home you really want is a very poor idea. The seller might say yes, but until it’s in writing and signed by all parties, that acceptance doesn’t mean a thing. The agreement is unenforceable.
Someone else can come in with a written offer and the seller will be free to accept it.
Be smart – be safe – put your offers (and your acceptance or rejection of those offers) in writing.