RE: Real Estate Podcast

Ben & Clint (00:00)
The highest offer does not always win. The best offer usually does. The best offer may or may not be the highest offer. It depends on other contingencies and motivations.

Clint C. Galliano, REALTOR® (00:25)
Welcome to another episode of the RE Real Estate Podcast. I'm Clint Galliano and with me is my co-host, Ben Harang Hey, Ben, how you doing?

Ben & Clint (00:36)
Clint, I'm doing terrific today, Weather's cooling off. Fall's here. It's almost winter, but fall's here. Yes, it is. Yes, it is. The heat doesn't last forever. It will cool off. Sometimes it just cools off a little later in the calendar than other times. So life is good. You gotta be cool. Don't let them see you sweat, Clint.

Clint C. Galliano, REALTOR® (00:45)
It's a good thing, man.

I always say as long as we stay cool.

That's right. That's right.

Ben & Clint (01:07)
Yeah.

Clint C. Galliano, REALTOR® (01:07)
What are we talking about today, Ben?

Ben & Clint (01:10)
Clint, we're going to talk about how to write a winning offer to give yourself, to put yourself in the best position to have your offer accepted. It's not always about the price. There's other things to consider. So we want to get to a yes and still have some protections in there for you as the buyer, as well as for the seller. So that's what we're going to talk about today.

Clint C. Galliano, REALTOR® (01:36)
Alright, start out we're going to talk about how we get ready. Kind of the pre-offer work that a buyer needs to do. So the first thing is proof of funds or pre-approval depending on if you're cash or a finance buyer. First thing is, well I guess it's a first thing sub first thing. It has to be current. It can't be from last year.

the pro tip, submit a pre-approval letter that matches your offer price exactly. Don't show them you can afford $50,000 more than your offering. And your agent should be on top of that and should be able to communicate with your lender to request that for you.

Ben & Clint (02:22)
I actually had a conversation with a seller about that this morning that how ironic that the pre-approval letter was for the same amount of as the offer without giving anything away. So that's real. Well, you're right. You're right. That's how it works. That's why they call it negotiating.

Clint C. Galliano, REALTOR® (02:34)
Well, yeah, you don't want to show your hand.

Yeah

Exactly. All right. And the next thing is that you want to have your agent do a market analysis or a comparative market analysis otherwise known as a CMA. So you don't want to offer based on the list price. You want to offer based on the market value. So the house and especially in today's market, the house may have been listed at what the seller wants to get when all the other houses are

listed at or below that price and if they're not moving either and they've all been listed for a long time then you definitely don't want to offer list price. So have your agent analyze it. ⁓ If you don't have an agent call me or Alright Ben, what's next?

Ben & Clint (03:17)
Mm-hmm.

Mm-hmm. All right.

There's really three pillars of a good offer or a strong offer. It's the price, the terms, and the contingencies. The price, you go shopping somewhere and something's not $200, it's $199.99.

If you want to stand out a little bit instead of offering $300,000, offer them $301,500. Just enough above just to get their attention. It doesn't really make a difference, a whole lot of difference, but it might get somebody's attention. To show them you're little more serious than somebody that offered them that round $300,000.

Clint C. Galliano, REALTOR® (04:17)
So I use this tactic when I'm offering on investment properties and I'll do out to a single dollar digit and even change when I request to make an offer. This was prior to becoming an agent. Just because it'll make the seller think, say that's a very specific number. They must have calculated that up and so that must be a serious number.

Ben & Clint (04:21)
Mm-hmm.

Mm-hmm.

Mm-hmm.

Yeah.

Clint C. Galliano, REALTOR® (04:42)
You know, and it makes, it gives them pause. And so rather than rejecting it outright, they say, okay, well, I'm going to take this seriously because it looks like they put a lot of work into coming up with that number.

Ben & Clint (04:45)
Right? It does.

Mm-hmm. it makes you stand out from somebody else ⁓ Just a little difference and that's all sometimes that But sometimes that's all we need is just just for somebody to pay attention to what we're And then we we have them on our side at that point We want to talk about escalation clauses and I'm gonna be honest they make me real nervous

Clint C. Galliano, REALTOR® (05:00)
I'm all about standing out from somebody else.

Ben & Clint (05:19)
from a fiduciary responsibility to a client. I don't give you as a, I'm representing the buyer, I'm not giving you any information about my buyer. If I'm representing a seller, I'm not giving you any information about my seller. Well, these escalation clauses that were popular when we had 2.5 % interest in.

COVID and everybody was stuck at home wanting to buy houses.

You can't, you can't prove or disprove that somebody offered more money without giving up somebody's position in the negotiations. So I've never been a fan of the escalation clauses. Sometimes they may be necessary. but know that they're out there and if you, if you decide to do an escalation clause, just understand that there's, there's a whole lot more to it than I'm going to give you a dollar more than the highest price you got from somebody else.

That's not exactly how the escalation clauses work. The terms of good faith deposit, we talked about good faith deposit. That shows you your seriousness in your intent on buying the house. The higher the good faith deposit is, the more serious it looks like you are about buying the house. Just know that.

The higher the good faith deposit is, the more likely an attorney may get involved about that good faith deposit. So just be conscious of that.

Clint C. Galliano, REALTOR® (06:52)
Yeah, so I know our broker, not a fan of the $500 good faith deposit, no matter what the price of the house is. I've heard him complain about that before. People are making offers on a $300,000 house and offering a $500 good faith deposit. Well, that's not a really good showing of good faith. That's saying I'm just...

Ben & Clint (07:01)
Mm-hmm.

Clint C. Galliano, REALTOR® (07:18)
putting the minimum amount just because I need to put something. Personally, again, back from my investor background, I use a good faith deposit as another indicator that...

me or my buyers or serious buyers and that we're making a serious effort to purchase this home. so if we're making an offer on $150,000 or less property in our market, that's a $500,000, I'm sorry, $500 good faith deposit. And I kind of use a sliding scale and increase that based on the price of the property.

Ben & Clint (07:52)
Mm-hmm.

Clint C. Galliano, REALTOR® (08:00)
It's similar to other areas that use a percentage of the purchase price as the good faith deposit or for earnest money. It's just that mine is a little bit more rigid than that.

Ben & Clint (08:10)
Yeah. and, we, we've talked about in a previous episode of the podcast, how significant a good faith deposit really is. but if you want to stand out from the competition, a solid good faith deposit is, is, is a good way to stand out. now if you, if you do offer that good faith deposit, make absolutely sure you have it within the 72 hours that's required in the purchase agreement.

Cause if you don't, the seller at that point can void the agreement, even though he accepted your offer. If, if he doesn't have evidence that the deposit's been made within 72 hours, it's his right to void the agreement if he chooses to. So just, we talked in a previous episode about the importance of the timelines. Just don't forget about the timelines and then the dates. if you, if you can find out what's driving the

the sellers when you make an offer but when they want to close if they want to close after Christmas they want to spend another Christmas in the house don't push the closing don't ask them to close on December 23rd close on January 3rd 10 days later and give them time to enjoy Christmas one more Christmas which really is what they want

And in that case, may, if somebody wants to allow them to spend Christmas in there again, they might take a few, a little less money to sell the house for the convenience of being in for Christmas. So if you can figure out what their motivation is from a buyer's side and use that in the offer, sometimes it's not the money that makes the deal, it's the contingencies that

that make the deal.

Clint C. Galliano, REALTOR® (09:55)
Alright, speaking of contingencies, here are the exit strategies. And again, when we're talking about the purchase agreement on the last episode, we kind of covered this stuff, but we're gonna go over in a little bit more detail as it pertains to creating your offer. So, first contingency that we're gonna cover is the due diligence and inspection period.

or the inspection contingency. One of the options is to shorten the window. So instead of 14 days, can you do seven?

reducing that time frame, even though it's kind of pointless to the sellers. I've had agents on the listing agents asked to reduce the inspection period. And I know they don't have, it's not the seller asking that, it's just them asking that for something to negotiate for. Because I know there's no valid reason on the seller side unless they're just trying to hurry up and get closed to do that.

Ben & Clint (10:46)
Mm-hmm.

Clint C. Galliano, REALTOR® (10:53)
But just, know, shortening it makes it harder, but it can get it looked at saying, hey, they're going to take less time. If you've got an agent that's got a good process for handling this, they can get it done in seven days and get it taken care of and make sure that everything's in good shape. If you run into anything that's a red flag during the inspection,

You can either ask for it to be repaired and if it's not, then because it's a contingency, you can walk away no harm, no foul and get your deposit money back. The next one is sale of other properties. if it's contingent on the sale of your current home, and this is moved on the 2026 purchase agreement, used to be buried down a little bit further in the purchase agreement. Now it's more upfront.

It's going to be the first thing the seller sees after a price. So if you do need that sale to go through before you can close, it's going to make your offer weaker. So, you know, if you don't have to sell the house to make the new purchase, then it's definitely going to give you a better chance of getting your offer accepted. And then, yeah, for sure. And then the last one is appraisal. So gap coverage.

Ben & Clint (12:04)
doubt about that.

Clint C. Galliano, REALTOR® (12:11)
So that may be, I don't always see a need for that in this current market, but a couple of years ago, going on closer to three years ago, I could see this as being something that would be something we would use, and that would be gap coverage, where buyer agrees to pay up to $5,000 above the appraised value, not to exceed purchase price.

so that if it does appraise up to $5,000 below the contract price, the buyer would cover that difference. if the seller was worried about maybe you increased your offer amount to get the, win the bid or something, especially if it was a multiple offer situation, then you're putting that.

Ben & Clint (12:49)
Mm-hmm.

Clint C. Galliano, REALTOR® (12:53)
appraisal clause in there are under terms and conditions that you'd be willing to pay $5,000 in that difference between the appraisal if it appraises lower than the contract price.

Ben & Clint (13:06)
And we talked earlier about the escalation clause. I'm a fan of the

the gap coverage, saying how much you would be willing to pay above the appraised value up to the sales price. That's a finite number that doesn't rely on another offer or exposing anybody's fiduciary responsibility. I think that's a solid way to do it if that's what you want to do. That's a solid way to make your offer stand out. So.

Clint C. Galliano, REALTOR® (13:33)
Yeah, because

worried that the house might not appraise for what you're offering, you're putting that guarantee that you're going to pay that much difference in whatever it appraises up to the contract price if it doesn't appraise at the contract price.

Ben & Clint (13:47)
So at that point, it just has to appraise no less than $5,000 less than they agreed upon sales price. all right, the next one is one I really don't like and have never used it. And it can blow up in your face. And that's the love letter trap. get feedback through social media and who does what and how to do it.

go to seminars and classes on how to craft these things and what works and what doesn't. I really don't like the love letters where the buyer is basically begging the seller to sell them the house. My last house burnt down, we have three children, we're homeless, my wife's expecting a fourth baby.

You know, we need to be in your school district because we can't afford to go to private school or whatever, whatever the case may be. Um, uh, it's a bad idea to, to, to rely on that, to, get them to pick you to sell the house to. It doesn't mean it doesn't work. And I'm sure people have used it in the past. Um, but we have, um, fair housing where we can't steer a seller or

A seller to sell a house to somebody or not sell a house to somebody. and it's, it's essentially the terms of the contract and not the, that love letter that tries to pull at the heartstrings. That's, that's not how we really do it. and we can get in a bind in a hurry, by somebody saying we, somebody discriminated against somebody, but,

Clint C. Galliano, REALTOR® (15:19)
For me, it just seems like it's begging. And I don't like begging. Now the a flip side of that. In a multiple offer situation, I've said, is the buyer is a first time home buyer. He's almost 40 years old and is ready, willing, and able to buy his first home.

Ben & Clint (15:22)
Uh-huh.

Yeah.

Clint C. Galliano, REALTOR® (15:41)
So I hope the sellers will take that into consideration.

Ben & Clint (15:45)
And that's fine. That's facts. know, it's not a 40 year old buyer might be more solid than a 22 year old buyer. And there's no age discrimination. We're not doing that, but he just might be in a better position. Who knows? But just the love letter, the love letter doesn't feel right to me because I can write anything in a letter.

It's how much money I have to put down. It's whether I can get the loan. Um, you know, so whether I have a house to sell, just all the other black and white terms and conditions of the purchase agreement, as opposed to, really love your house. I would love to buy it. Um, that's, that's not, that's not me. So, all right, Clint, you up.

Clint C. Galliano, REALTOR® (16:32)
All right, the negotiations on the 72-hour rule. This is tied into the buyer response to inspection. So what is it? It refers to the strict timelines during the inspection and remedy phase, the dance. It's unique to Louisiana contracts and trips up many buyers. So here's the process. It's buyer's request, you submit.

your response to inspection and say, not everything was up to the standard that I expected, and here's a list of items I'd like repaired. The seller has 72 hours to respond with, yes, I'll repair everything, no, I'm not repairing anything, or I'll repair some of it, or I'll give cash in lieu of repairs, or I'll do some combination of repairs and cash in lieu of repairs.

and then the buyer's got 72 hours to accept their response or walk away. So there's a danger and if you don't respond, that renders the contract null and void. So in other states, silence means yes. In Louisiana, silence kills the deal.

Ben & Clint (17:41)
Mm-hmm.

Clint C. Galliano, REALTOR® (17:42)
if the seller ignores your request or if you ignore the seller's response, then the contract becomes null and void automatically after the deadline passes. So good strategy is to stay awake at the wheel. Missing that deadline doesn't mean you bought the house as is. It often means you lost the house entirely. So and like we say, we're not responsible for deadlines, but we do our best to

Ben & Clint (18:01)
Mm-hmm.

Clint C. Galliano, REALTOR® (18:09)
make you aware of when you need to respond by so that we stay well inside those deadlines.

Ben & Clint (18:17)
Right. We

can't, we can't make you respond, but we can, we can let you know when the response is due and it's up to you as an adult to live within those timelines or lose the house.

Alright Clint in summary

There's three things you can do. Just as a professional, get your agent to make sure the office clean. Do it promptly when you're ready to make the offer. Make the offer. Don't make the offer. If you decide on Friday, you want to make the offer. Don't make the offer on Tuesday. Make it on Friday and be smart about it. Explain your financial position. Get the, get the point across that you are ready.

ready, willing and able to buy the house. You have the ability to get the loan, get a good pre-approval letter, make sure that the contract is written legibly and properly without a bunch of blanks missing. Like we see all the time we get, we get offers just, don't, you can't even tell what the offer is. It's written so poorly. And when they send you that contract,

in an electronic signature software, there's a way to look at it full size and read it. Look at the terms and conditions, make sure the agent, you and the agent are on the same page. Because the last thing you want to do is make the offer and then realize the offer wasn't right and wasn't what you intended, whether it's better or worse, it doesn't matter. Because if it's better than you, then you can't buy the house. Or if it's worse, you

you're not going to buy the house because your offer was not fairly represented. So be professional about it. Make sure you're dealing with a professional agent that can get it done right the first time. hopefully you'll get the house and you can get into the inspection phase and appraisal and get through all the contingencies and get the closing. So I believe that wraps it up for the day Clint.

Clint C. Galliano, REALTOR® (20:08)
Yep, I think so. We'll throw out some homework here, and the homework is get you an agent. If you don't have one already, again, I'll say Ben and I are available. So contact one of us, or if you're not comfortable with one of us, find someone you are comfortable with, and reach out to them to go over the purchase agreement with you.

Ben & Clint (20:24)
Mm-hmm.

Clint C. Galliano, REALTOR® (20:30)
so you can have better understanding and talk to them about their process for making offers. And so that's the homework. All right. ⁓ Remember to like.

Ben & Clint (20:37)
Okay, alright, well before we go, like

subscribe share Send it to your mom in them ⁓ and You know if you think if you get some value out of it We obviously we do this and we obviously think there's some value in and what we do Share it with somebody do a deep dive in it. You don't need to listen to them all or watch them all Whether they you listen to the audio podcast or watch the video on on YouTube But if there's a topic that interests you

Clint C. Galliano, REALTOR® (20:44)
Subscribe, share.

Send it to your mom and them.

Ben & Clint (21:09)
go look at it and if you have any questions, Clint and I are easy to reach our contact info is on RERealEstatePodcast.com where the YouTube links are.

Clint C. Galliano, REALTOR® (21:18)
They're in the show

notes on every episode.

Ben & Clint (21:21)
We make it as easy as we can for y'all to find us. if you have a question, call us. We can't, we can't talk about a deal that you currently have working with another agent, but if you have a generic question, and you don't have an agent call us, we're not going to try to make you sign something before we answer a question for you. we just, we just talk like adults and get to know each other. And if you get a comfort level, we'll proceed. If you don't, then you call somebody else.

Okay that's a wrap, Clint.

Clint C. Galliano, REALTOR® (21:51)
All right, don't forget rerealestatepodcast.com.

Ben & Clint (21:56)
See ya.

Clint C. Galliano, REALTOR® (21:58)
in the can.

Ben & Clint (21:59)
It is.