Verbal offers to buy real estate are a bad idea

Verbal offers - are they real? Image of a house with those words and a real estate agent on the phone in front3What  are verbal offers to buy a home?

Simply put, these are when a home buyer and his or her or their agent write up a bid on a proper form such as the PRDS or CAR contracts, but orally or otherwise casually tells the seller or the listing agent of a price that the buyer would offer for the property.

  • Communication from a buyer or buyer’s agent that the client would like to purchase the property for a particular amount of money.
  • Sometimes they also include some of the contract terms, such as “all cash offer” or “no contingencies” or “30% down”.
  • Most of the time, the buyer doesn’t want to spend the time to write it up unless there’s a verbal assurance that the seller will accept the offer.
  • With a verbal offer (which could be in person, by phone, by email, by text, etc.), there’s no proof of anything – no proof of funds, proof that the disclosures have been reviewed, and so on.

This is a terrible idea, whether you’re a buyer or seller.  But why?

Verbal offers are not serious offers

First, there are a LOT of terms in the offer besides just the price.  They include things like the loan amount and percentage (80% loan to value ratio or something else), the amount of the initial deposit and when it will go to title, whether the buyer is preapproved or not, the number of days for various contingencies, how long the escrow should be, what personal property should be included, and much more.

Often those terms are extremely important.  Consider just one: all cash versus financed!  Verbal offers are usually only the price being floated by.

Written offers, not verbal offers, come from committed home buyers

If a home buyer is sincere and serious about purchasing property, he or she will get it in writing and be specific about the myriad of terms that are part and parcel of the agreement. A seller cannot fairly even consider a verbal offer because so many of the terms are simply missing in action.

Nanny cams

Are you being recorded - nanny cams, video doorbells, and security camerasWe’ve all heard of “nanny cams” and realize that many homes with babies are equipped with them. A fair number of pet owners have them, too – some even enable dog or cat owners to talk with their furry family members remotely, and some super high tech ones even dispense treats!

But what about homes for sale in Silicon Valley?  Do many of our local San Jose area listings have nanny cams?  And if so, are they recording audio as well as video?

What we’re really asking is this: are sellers spying on buyers?

In a nutshell, it’s legal for home sellers to use video doorbells and security cameras that use audio by their front door and in areas that would be considered “public”. Hidden nanny cams that record audio without the recorded person’s consent are illegal. Having security cameras indoors that do not record sound, though, are legal.

Security cameras, video doorbells, and nanny cams

What’s allowed in terms of recording varies from state to state. A cousin of mine who sold her home in another state had indoor security cameras with audio and she watched the open house events to see what was said (by her agent as well as by the buyers or interested visitors). In that state, it was legal to do so.

In California that would be illegal unless the people being recorded had given their consent. California’s eavesdropping law aims to curb recordings done without permission on the phone or in a place where people have a reasonable expectation of privacy. In other words, having a hidden nanny cam that records audio is illegal.

Exceptions include public places

There are some exceptions, though. One is if you’re in a public place. It seems that one’s front yard or front porch – anything before the front door – is public. Therefore it’s perfectly legal to have security systems that record video and audio both. Some enable conversion to be two ways, too.

Approach any high tech video doorbell on a front porch and what you do and say can be seen and heard, and it’s legal to do so.

Hold the conversations until later

It’s easy to forget that even a quiet conversation on a front porch or driveway my give away info you’d rather not share with the sellers or their agent. If you can see a camera, there’s a good chance that it can records both sounds and sights.

Inside, there should not be any audio recordings being made, but there could be hidden nanny cams, so you cannot be sure. Some of them are quite small and easy to miss. It’s best to behave as if cameras with sound are rolling, and to avoid discussing anything sensitive while in the home or in earshot of surveillance cameras.

A video from Washington State

A few years ago, I saw the video below, which is from a real estate attorney in the state of Washington.  Our rules may be different but the prevalence of the nanny cam is something to be considered.  Have a look and listen:



I like her idea that questions and comments should be held until away from the property.  That cannot hurt and may help your position should you elect to present an offer on that property later.


Security related reading:

Getting a fumigation? You may want security with that.

California audio and video  recording laws (on the website)


Can you change your purchase offer after it’s signed?

Pen and edited text with the words - Can you change your offer? With multiple offer situations in Silicon Valley real estate bids, sometimes buyers write an offer and later decide that it’s too much or too little, or that some other change is warranted (before it’s submitted).  Can you change your purchase offer after it’s written, or is it a “done deal” once you’ve signed it?

The good news is that you can change your offer before it has been given to the listing agent / sellers. Many buyers do, either because they changed their mind or strategy, or because they just got new information. What is key is circling back to your buyer agent quickly, before the email is sent.

Why would you change your purchase offer?

Awhile back, some of my buyers were bidding on a San Jose home. As I asked the listing agent more questions and we got a little more information from that agent on the numbers of offers being received, my clients wanted to improve their offer. We redid page 1 of the contract, which is where all the financial basics are listed. Their improved offer went to the listing agent and it was seamless.

At other times, even after the offer is submitted, I have had buyers ask to improve their offer. The pages of the contract which were involved in the change were redone, signed and resubmitted. This is a bit like going through the counter offer process yourself. (more…)

What is your negotiation style? What’s your agent’s approach to negotiation?

Negotiating styleAs world travelers know, there are many ways to approach negotiation, and different “rules of engagement” too. Things can go awry over the smallest or biggest things.   Sometimes conflicts arise because the home buyers or sellers and their agent(s) have different ideas about the right or wrong way to engage in negotiations.   Some of it may be cultural, some of it may be professional training or personal choice.  But unless you discuss it with your Silicon Valley Realtor, this could become an unintended area of conflict, stress and upset.

Win Win or Win Lose?

Many Silicon Valley Realtors believe in a “win win” negotiation style, meaning that they want everyone to be happy in the end. Why is this the case?  Why should they care if everyone is happy – why not only their own clients?  There are a lot of reasons, but here’s a big one:  happy home buyers and sellers do not sue each other.  It’s one thing to buy or sell and close the deal, it’s another to make sure that the post-sale experience does not go into a meltdown.  That’s when things get both very interesting and very expensive.  (To say nothing of the fact that mail won’t be forwarded, help won’t be forthcoming with quirks of the home after settlement if you end your purchase or sale on a sour note.) (more…)

Why do some buyers want a very long contingency time frame?

Calendar - not so straightforwardWhy is it that some buyers write offers with no contingencies whatsoever, but others want a very long contingency timeframe – 14 or 17 days – even if there are disclosures and inspections available up front, for the property condition or loan contingency?

Sometimes the length is a reflection of fear, of either the buyers or their lender (or in some cases, their agent or family member).  What’s the worry? For example – if it takes a week to get the home inspector out to the house, and the inspector calls for further inspections, perhaps more time than a week will be needed.

To counterbalance that fear, home sellers can have home, pest and other inspections reports done and available prior to the home going on the market.  An important thing to remember is that confident buyers pay more, and scared buyers pay less for a home.  Remove fear and the price tends to go up – and the contingency time frames (at least for inspections) goes down.

Sometimes the long contingencies reflect other concerns or may reflect hidden contingencies. What does that mean?  Today the Silicon Valley real estate market is extremely competitive, and many buyers are writing offers without appraisal or other contingencies.  But if one contingency, say for property condition, is long enough, then the buyer may use that contingency as an excuse (albeit in bad faith) to get out of the contract if there’s a problem with the contingency which supposedly was waived in the contract, such as the loan or appraisal.

For sellers, there’s no sense of relief until the last contingency is removed, so if there’s no loan or appraisal contingency, but a 2 week contingency for property condition (inspection), that’s two weeks of worrying that the transaction will fall through. Whether or not they suspect a concealed contingency, they understand that it’s not yet a sealed deal, and they worry.

Buyers, should you try to use a long property condition contingency to “cover yourself” if you write an offer with no contingency for loan, appraisal, or both?  I do not suggest this.  First of all, it is not truthful, and you risk a number of things.  The sellers may catch on and not want to negotiate further with you should you want or need some repairs in escrow.  Second, you may leave yourself open to a potential risk with your initial deposit. (Real estate agents who operate this way will risk ruining their reputation and find themselves viewed as lacking integrity.)

In multiple offer situations, buyers will find their offers rejected if any contingencies go past about 10 or 12 days.  In those cases, often the buyers feel stressed and pressured, unable to really breathe in escrow since there’s such a rush to make a final commitment – even if not fully safe.   The reason it happens, though, is because sellers want to know that when their home is sold, it is really sold – and the buyer won’t later back out.  When there aren’t multiple offers, though, sellers do not have that same leverage, and sometimes one or more contingencies may be longer than the seller is comfortable with at all.

The pendulum can swing either way with the market.




Do you need to like your real estate agent? Do you need other agents to like yours?

Likeability and real estateLikeability is a subjective term.  Who’s likeable? How important is it? Most of all, how relevant is your Realtor or agent’s likeability to your home buying or selling success in Silicon Valley?

At times I’ve been shocked at what I’ve heard from consumers and industry insiders alike:

“You don’t need your clients to like you.  You need them to respect you.” (As if these were diametrically opposed.) – a real estate trainer & coach

“I didn’t want to hire someone I’d like or who’d be my best friend. I wanted to hire a tough negotiator.” (Again, seeing these as juxtaposed.) – a real estate home seller

Why do some people think that being a good negotiator means that you have to be rough around the edges, a difficult person with whom to get along?  Strong negotiating doesn’t mean being a jerk, or even being aloof.

In many cases, it’s the exact opposite.

Many of the top agents in the San Jose, Los Gatos and Saratoga markets are indeed quite gracious and pleasant.  They are smart and they are driven.  Most are genuinely nice people, while a few have learned that good manners is part of good business.  Yes, there are a few successful ones who don’t match this description – but they are the exception, not the rule.   And in truth, their lack of likeability is inhibiting at least some of their success. If you hire one of them, it may impact yours, too.

An arrogant, rude and nasty agent may find that his or her colleagues are less excited to show his/her listings.  Or that they will be less enthusiastic if he/she brings an offer in on one of theirs.  Conversely, if that agent is well liked (and, of course, well respected) by the real estate community, it’s far more likely that agents will want to have him or her on the other side of a transaction. (more…)