Many people use the term OFFER and CONTRACT loosely in real estate, REALTORS® included.
When you write an offer on a property, that is where you are putting in writing, your intent to buy the property.
As soon as the seller agrees, and all parties have signed, you have a fully executed contract.
Yes, that is a contract, not an offer. That means you can’t start signing other offers, because you like them better.
A major misconception with offer vs contract, has to do with short sales.
In short sales, the contract is between buyer and seller, just as with a regular contract. The difference is, the bank has to approve the contract.
Many REALTORS® who are unfamiliar with short sales, keep taking offers, and continually sending them to the bank. You need to avoid these types of situations, because it means most likely, that the REALTOR® doesn’t know what they are doing.
Since I handle a lot of short sales, I know the right questions to ask. I tried to schedule a showing for 9am on a Saturday with a house that was listed as an approved short sale. The REALTOR® wouldn’t answer her phone, and her voicemail didn’t pick up.
So, I tried texting, to which she immediately answered. Here was the text conversation that happened.
ME: I was hoping to show <address> on Saturday from 9am-9:15am please. Thanks!
HER: I got a lower than list offer, so I don’t know that it will be accepted.
So I will submit other offers.
However, that’s pretty early for a Sat
ME: I only have him for the am, he is in from NYC and wants to see 7 properties. So I have to start early
Do you have any offer or a contract?
HER: I got a lower than list offer, so I don’t know that it will be accepted.
So I will submit other offers.
ME: But did seller sign it?
Is it occupied or vacant?
HER: Yes
Occupied
ME: So the seller signed and you have a contract? But you are taking backup offers?
HER: Yes today
ME: Ok.
HER: I am submitting all offers signed and unsigned
You have to make it after 10
It’s occupied w 5 people and shows like a ghetto
Wow, she really knows how to sell a property! 😉
The ones that lose out the most on this are buyers. Because they see a property as available, and want to see it. If the agent doesn’t know better, they not only will show it, but they will write an offer on it. The poor buyer will get frustrated if the property has a contract, or the agent has multiple offers just stacking up for their seller to have their pick.
In conclusion, make sure you are working with a REALTOR® who knows the difference between a contract and an offer.