How to be successful in your offer

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   How to choose a Broker.                                                                             By David Houck 

With the new 2024 rules ALL Buyer’s working with a realtor must sign a “Buyer’s Brokerage agreement” PRIOR to a Realtor showing a home, The rules require the buyer paying their broker and the seller paying their broker. See our brokerage agreement at AtomicRealty.net under the “buyers” dropdown menu. When interviewing  brokers to discuss what they charge we encourage you not agree immediately, tell them you want to think about it. A professional will not try to strong arm you. Ultimately te buyer pays everything including the buyers brokerage commission – The buyer is the only one bringing money to the transaction. See our article on “who really pays commission.” 

Some highlights of our business model include.

1)UNLIKE SOME BROKERAGES, ATOMIC’S BUYER’S BROKERAGE AGREEMENT ALLOWS YOU TO TERMINATE THE AGREEMENT ANY TIME. That’s right we will not lock you into a 6 month long agreement.

2) if you buy a property Atomic Realty has listed, and are working with Atomic Realty under our buyer’s brokerage agreement we will charge the buyer ZERO commission , yes ZERO.

3) If working with Atomic under a buyer’s brokerage agreement and you want to purchase a home another brokerage has listed we still may charge less than some other brokerages and will generally ask their seller to pay this on the buyer’s behalf.

We recommend using Full time Realtors. Always ask if the broker has another job. Some part time brokers do not do enough business to understand the nuances of the contracts and the process. This lack of understanding can cause conflict and hardship for all parties . While many part time brokers are good people, would you want a part time financial planner to give you advice on your 401k?  With your house likely one of your biggest investments we believe it warrants a full-time professional working for you.  At Atomic Realty we take your investment seriously, we sell homes full-time for a living, not as a hobby or some "mad money" for the next vacation. 

Education/ experience: Just as an employer will ask about experience and education before they engage a employee you too should ask: 

1) What relevant education does the broker have in real estate? 

2) How many transactions have they personally completed this year? 

3) What experience does this broker have? 

4) How long has the broker worked in the industry? 

While an offer is never certain this document shares some ideas how we feel to best be successful in your offer. In our market it is not only about whether a Buyer has offered enough money, it is as often about whether the Buyer’s broker has the education and experience to suggest items making sure your offer is the best offer you can make in totality, meaning the offer is the best money, and the best terms you feel comfortable making. 

Prequal: Prior to making an offer, get a prequalification or preapproval letter from your bank. Usually, Sellers will not accept an offer without a “prequal” letter. 

The section in the contract that covers inspections has objection dates (They are in the same section so a reasonable person would understand they apply to each other.) Generally, in a contract all of the items in a section apply to each other, otherwise why have them in the same section. Secondly, they apply the contract in total. We suggest completing your inspections prior to the objection dates, If you do not object in this period, you are deemed to have waived the right to object and jeopardize your earnest money if you do object. 

Waive inspections: Many Sellers are doing pre-listing inspections, and usually they share these with prospective Buyers. This is good for both the Buyer and Seller, The Seller can address any issues, and the Buyer has a better idea as to what they are getting into and make their offer accordingly. As a Buyer, If all the inspections you want done have been completed, and if you are satisfied you may want to consider waving additional inspections to make your offer more appealing.

Appraisal gap: In our market some Buyers also pay the “appraisal gap” . What this means is that while an appraisal is still done for the Buyer’s bank, if the home does not appraise at the loan amount or higher the Buyer will pay the excess up to a maximum. Cash buyers are not required to do an appraisal and may choose to waive an appraisal completely.

Cash vs loan. Often a Seller will find a cash offer “stronger” than an offer with a loan. They find more certainty in the cash offer and have less concern that fluctuating interest rates will make the house unaffordable to a Buyer. 

Deadlines: If the seller has asked for a 48 hour response time for your offer don’t try to pressure them with a short response time. Often, they are on travel or in the process or moving and they will let your offer expire. 

Strongarming: Don’t make threats to the Seller you don’t intend to follow through with. For example: “If you don’t accept my offer by my offer’s short deadline, I will not buy the house” In the current market, strong arming Sellers generally only alienates the Seller and they select someone else. 

Lowballing: In the current market offering a very low offer rarely is successful. If the house is too rough just don’t make an offer on it, if you do make a “lowball” offer don’t have high expectations of success.

Offer concessions that help the Seller. Often Sellers are getting themselves set up at the other end and flexibility in closing dates or leasing back to the Seller for a short period may make your offer more desirable than others. Conversely a Seller may desire a shorter time to close. If possible, accommodate their needs.

No Broker is more likely to get your offer accepted than any other broker. All brokers submit all offers then the Seller reviews the terms and price of all offers and decides what works best for them. If a Broker says they can more likely get your offer accepted than another offer, perhaps something shady is going on.

Work with your broker as a team: Be honest and forthright as to your goals and limitations, your Broker wants you to be successful. Feel comfortable that your Broker cannot share any confidential information. You need to trust your broker, If you don’t, find another broker.

We work as "transaction brokers" - this means we will work with you with and provide:

a) Honest and reasonable care and ethical and professional conduct; 

(b) Compliance with local, state, and federal fair housing and anti-discrimination laws, 

(c) Performance of any and all written agreements. 

(d) Written disclosure of any potential conflict of interest.

(e) Written disclosure of any adverse material facts actually known by the broker.

If there is nothing currently for sale that meets your needs, we will happily set up an alert to notify you when something comes up that may interest you and if out of town we can do a virtual showing with you. Just let us know that you would like an alert set up. 

      Who pays ALL the commission                                             By David Houck, QB Atomic Realty

1) In the past people would argue when a Seller listed a house and agreed to pay 6% (ex: 3% to the listing broker and 3% the buyer’s broker) it seemed unfair that the seller was having to pay both brokers. While the seller is paying this 6% from his/her proceeds, the proceeds are really ALL coming from the Buyer, then paying the Seller and then the seller pays the brokers. While paying the brokers will decrease the sellers NET the buyer is actually the only person coming to the table with ALL the money. Merely because the seller gave some of the buyer’s money to the brokers, doesn’t mean the Seller is paying the Broker.

2) Even under the new NAR rules the buyer is often still paying all the commission. If the seller has listed and agreed to pay the listing broker 3% to list and market the property and the buyer has contracted to pay her broker (the buyer's broker) 3% at closing but the buyer ask the seller to pay her buyer brokers commission on her behalf, still the only person bring money to the transaction is ONLY THE BUYER  bringing all the money to the table. Again the sellers NET may decrease but the buyer is the ONLY one who brought the money to close and has likely wrapped the cost into their loan and borrowed it to pay both brokers.

3) YOU, THE BUYER, ARE PAYING ALL THE COMMISSION. THE ONLY WAY, AS A BUYER YOU PAY LESS COMMISSION, IS TO NEGOTIATE TO PAY LESS COMMISSION TO YOUR BUYER BROKER. 

Here is an example: 

Sales Price    Listing broker commission    Buyer broker commission     Sellers net         Buyer pays 

$500000        3% ($15000)                         3% ($15000)                       $470000              $500000 

$500000        3%($15000)                         1.5% ($75000)                     $485000              $485000

In either case, the buyer is the one who brings ALL the money and generally the Buyer is paying interest on it in the loan! 

The only way the Seller nets more money AND the buyer pays less money is for the buyer to negotiate a lower buyer’s broker commission. The unintended positive consequence for the buyer is they are more likely to have their offer accepted as the seller is netting more money as well. Under the new rules we recommend researching what brokers charge buyers. 

 If you want to talk about commissions as a seller or a buyer please call Atomic Realty AtomicRealty,net Office-505- 208-0480 David Houck is the Qualifying Broker for Atomic Realty, with over 40 years experience, a BS in math and physics and a doctorate in law. For more details on these issues and free selling and buying tips see AtomicRealty.net 11-05--24set up.

   Buyers- The process of making an offer.

1) The first thing a Broker will ask is  “Are you working with another broker?”  If you say no, Brokers will require you to sign a Buyer’s brokerage agreement binding you work with them for some period. With Atomic you can cancel us at any time.   If you say yes, professionalism dictates we recommend you contact them.  If you say no we are not working with another Broker, we trust you are honest, will take your word and will work diligently to earn our commission.

2) The next thing we will need to know is do you have a preapproval or prequalification letter from your lender? The reason this is the important next step is that The Buyer needs to know how much they can spend and Seller needs some assurance the Buyer can get a loan for the amount offered before accepting a Buyer’s offer. 

Generally a buyer will present a prequalification letter with their offer.  The prequalification letter should indicate 1) the Buyer has made a loan application, 2) A credit report has been reviewed by the lender, 3) The lender has pre-qualified the Buyer for $X.  4) and the loan type the Buyer has prequalified for.

Please be aware the “pre-qualification” letter is based on consumer-submitted data, compared to a “pre-approval” letter where the  borrower must complete an official mortgage application as well as supply the lender with all the necessary documentation to perform an extensive credit and financial background check. Getting pre-approved for a mortgage actually speeds up the buying process as the lender has already verified much of the information provided.  In a competitive market this signals the Seller that the Buyer is serious about moving forward.

In an environment of fluctuating interest rates,  a buyer and a seller will want to both make sure that the interest rate is “locked in” for a period of time that extends beyond the closing. Why? What happens if the interest rates suddenly increase and the Buyer no longer qualifies for the loan? If that occurs the Buyer can back out of the transaction as they no longer qualify for the loan and they will get their earnest money back. In the meantime the Seller will continue to have to carry the cost of the house until another buyer is found.  Not a good outcome for either party.

Buyer’s Tip: To make the Buyer’s offer stronger the Buyer should make sure the prequal letter presented to the Seller is locked in at a specific amount, duration, and interest rate.This helps assure the seller that an interest rate increase will not affect the Buyer being able to obtain financing. 

Buyer’s Tip: Buyers to strengthen your offer  consider providing a preapproval letter rather than a prequalification letter.  Sellers - Both a pre-qualification and pre-approvals are merely documents to assist the Seller in feeling more secure the Buyer is financially capable of the purchase, not a guarantee.  

Buyer’s Tip: Buyers -PLEASE .  do not misrepresent yourself for you prequal letter or loan application. There could be civil and criminal implications from doing this.

3) If available prior to making your offer: Buyers should review the Adverse Material Fact Seller form, NMAR 1110. This used to be called the “disclosure form” It is supposed to disclose any latent (hidden) defects the Seller knows about. Atomic Realty does not provide, complete, or corroborate this information, it is a document ONLY the Seller can complete. Acknowledgement of the Adverse Material Fact form, NMAR 1110 does not prevent you from objecting to an issue during the Inspection Contingency Period.

4) Prior to making your offer:  Investigate the Surrounding Area to verify you are satisfied with it. While it is a possible ethical and HUD violation for us to suggest areas to live, we suggest looking into crime statistics, school information and other data that is important to you and verify it is acceptable to you.

5) Buyers - Atomic Realty has found you a great house and you now want to make an offer.  – Now what? We will write up the offer. There are numerous documents that you will need to review, initial, and sign. Read the entire purchase offer BEFORE signing it physically or electronically as electronic signatures are binding. We at Atomic Realty will discuss and advise you regarding all the forms and entire process during your purchase. However, if you are still uncomfortable with, do not understand, or still have questions regarding the meaning or veracity of any document in your transaction, Atomic Realty recommends seeking your attorney’s advice. ALWAYS, as with any contract, understand what you are signing and verify anything that is important to you. The obligations/ responsibilities set forth in your Purchase Agreement, other than the specific listed broker duties, are those of the Buyer and Seller.

6) If the Seller accepts the offer the Buyer will need to write a check or wire transfer Earnest Money funds to the title company.  The Buyer or Atomic Realty can deliver this to the Title Company. If you have not done so already, move forward with your lender and/or supply your proof of funds.

7) If the Seller accepts the Buyer’s offer  Atomic Realty will “Open Title” with a title company that services the area.  The title company will make sure all the necessary documents for transfer of title are complete at closing.

8) If the Seller accepts The Buyers offer the Buyer  should expect 6-8 weeks to close.  Some faster some slower depending on the individual circumstance.

9) The Inspection Contingency Period: If the Buyer wants inspections completed we will help schedule and be willing to attend such inspections with the Buyer or in their stead. There are strict timelines for this.  We have listed some companies that work in our area the Buyer may want to talk with them or use a different company.  We have a list of some companies that work in this area  under the "Service Vendors" tab in the "about us" dropdown menu.

10) Confirm your ability to obtain insurance and insurability of the property during the insurance contingency period, be aware some companies will not insure here. Talk to your insurance company, if you don’t have an insurance company you are working with there are some fine local companies you can talk to see if they meet your needs.

11) The Buyer’s bank will send an Appraiser to confirm the house is sufficient collateral for the loan. The listing Broker generally attends this not the Buyer or Buyer's Broker.

12) Review the Inspections paragraph of the purchase agreement. Please understand the consequences of waiving any part of the appraisal or inspections prior to making an offer. Furthermore, understand the consequences of escalating your offer above the asking price. (See our FAQ page for more details and examples.) 

13) Adhere to all of your agreed deadlines. Deadlines can ONLY be extended if BOTH parties agree. 

14) Review the entire Title Commitment, including all exceptions, within the Review Period Time. If you believe there is an issue, we must object in the proper time. The title commitment will tell you about encumbrances currently on your property and tell you exactly what the title insurance will insure against.

15) The title company may require an Improvement Location Report.  This is to verify that the home sits on the property and generally it is used for the Title Insurance Company to verify that the improvements are where they are supposed to be thus can be insured.

16) While most people accept the county provided square footage information. If you are suspect of the Square Footage listed or it is a material matter to you, you are advised to have it inspected and verified during the purchase agreement's inspection period.

17) Conduct a thorough pre-closing walkthrough with the Buyer Broker. Usually this is done a few days prior to closing.  The purpose of this is done to verify the property in the same condition as when you contracted and are all the things there that were agreed upon. IT IS NOT ANOTHER INSPECTION PERIOD. If the property is not what you have agreed to and it is unacceptable, speak up as  after the closing might be too late.

18) At closing when the Buyer’s bank has funded the loan and all the documents are signed the title company  will provide the Buyer the keys, NOT BEFORE.