© 2011 Cengage Learning
Writing and
Presenting Effective
Purchase Contracts
Chapter 7
© 2011 Cengage Learning
RATIONALE FOR CHAPTER
Choosing the right broker to work for is
probably the most important decision a
new licensee makes!
© 2011 Cengage Learning
RATIONALE FOR CHAPTER
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This chapter illustrates the “art of selling.”
It discusses how to effectively handle the
emotions and thought processes that
buyers go through when making buying
decisions.
© 2011 Cengage Learning
RATIONALE FOR CHAPTER
The chapter discusses many of the
reasons why people buy property, and
states many of the common objections
made by buyers and how to handle
them.
A detailed analysis of the residential
purchase agreement (revised 4/10) is
found in this chapter.
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CHAPTER SEVEN OUTLINE
7.1 SELLING OR COUNSELING
7.2 WRITING THE RESIDENTIAL
PURCHASE CONTRACT
7.3 UNDERSTANDING THE RESIDENTIAL
PURCHASE AGREEMENT AND JOINT
ESCROW INSTRUCTIONS (RPA-CA)
7.4 PREPARING TO PRESENT THE
OFFER TO PURCHASE
© 2011 Cengage Learning
CHAPTER SEVEN OUTLINE
7.5 NEGOTIATING THE OFFER WITH THE
SELLERS AND LISTING LICENSEE
7.6 SELLING YOUR OWN LISTING
7.7 HANDLING SINGLE AND MULTIPLE
COUNTER OFFERS
7.8 BUYERS ESTIMATED CLOSING
COSTS
7.9 SETTING UP THE ESCROW TIMELINE
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SELLING OR COUNSELING
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Differences?
Types of closes that an agent may use.
Use of and differences between openend and closed-end questions.
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WRITING THE RESIDENTIAL
PURCHASE CONTRACT
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Why do people decide to buy homes
(security, pride of ownership, etc.)?
Why do people decide not to buy
(restricted mobility, greater
responsibility, etc.).
Mirroring and its effect on
communication.
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WRITING THE RESIDENTIAL
PURCHASE CONTRACT
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Common objections made by buyers
and how to handle them effectively.
Benefit of giving the buyers each page
of the purchase agreement as you
finish writing it, and asking them to read
it and ask questions.
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UNDERSTANDING THE RESIDENTIAL
PURCHASE AGREEMENT AND JOINT
ESCROW INSTRUCTION
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California Statute of Frauds requires
that all real estate contracts be in
writing, except for leases of one year or
less.
Importance of clarity in a purchase
agreement.
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UNDERSTANDING THE RESIDENTIAL
PURCHASE AGREEMENT AND JOINT
ESCROW INSTRUCTION
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The form acts as a checklist while
creating a contract and this is done to
ensure completeness and to protect the
rights of all parties to the contract.
Difference between a bilateral
agreement and a unilateral agreement
and how each affects the rights of the
parties.
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INITIAL INFORMATION
Information required at the top of page
of the purchase contract (i.e. date,
names of the parties, address and/or
legal description, etc.).
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C.A.R. RPA-CA
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Sub-paragraphs A through L of the
financing paragraph 2.
If a buyer makes a “cash” offer, the
buyer must verify the source of his or
her funds to the seller within the
prescribed time or the seller can cancel
the offer.
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C.A.R. RPA-CA
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Paragraph 3 of the Purchase Contract
lists closing & occupancy details.
Paragraph 4 is allocation of costs.
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C.A.R. RPA-CA
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Disclosures required in paragraphs 5;
who they protect and why.
Importance of adhering to the time
limitations in paragraph 14.
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C.A.R. RPA-CA
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Contingent sale and its ramifications on
how this type of contingency will be
viewed by a seller.
“Who, when, and how” of FIRPTA
withholding.
Limitations of earnest money deposits.
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C.A.R. RPA-CA
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Importance of paragraph 22 to the
seller and to the agent.
Importance to the brokers and agents of
paragraph 25.
Need for clarity when writing anything in
paragraph 27.
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C.A.R. RPA-CA
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Statements in paragraph 30 and why
they are included in the contract.
Importance of strictly adhering to
paragraph 28 by giving a copy of each
document a principal signs to him or her
immediately after he or she signs.
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C.A.R. RPA-CA
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How to handle the creation of a counter
offer and how to incorporate it into the
purchase agreement.
Why is it important to have clarity in
writing a counter offer.
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SHORT SALE
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What is a short sale and what type of
cooperation is required from the lender
and sellers.
Contract language that must be
included in the purchase agreement to
protect the rights of all parties (buyers,
sellers, and lender).
© 2011 Cengage Learning
PREPARING TO PRESENT THE OFFER TO
PURCHASE
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Importance of the buyer’s agent having
solid, factual data about recent property
sales in the seller’s neighborhood.
Benefits of a buyer’s agent presenting
an offer in person instead of by fax
(what the buyer’s agent should do to
better represent the buyers when he or
she is precluded from presenting an
offer in person.)
© 2011 Cengage Learning
PREPARING TO PRESENT THE OFFER TO
PURCHASE
Importance of having the buyers
prepared to meet with you in person
after their offer is presented, and why
phone presentations of counter offers
are not a good idea.
© 2011 Cengage Learning
NEGOTIATING THE OFFER WITH THE
SELLERS AND LISTING AGENT
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Importance of meeting with listing agent
shortly before meeting with the sellers.
Benefit of having the listing agent
present the buyer’s agent’s offer even
while the buyer’s agent is present.
Negotiation tactics including awareness
of the sellers’ body language and voice
inflection.
© 2011 Cengage Learning
SELLING YOUR OWN LISTING
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Pros & cons of an agent selling his or
her own listing.
One party gets too pushy about
receiving inappropriate information
about the other party.
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How would you handle it?
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SELLING YOUR OWN LISTING
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Proper sequence of presenting the dual
agency disclosure and election.
Role of the Golden Rule in presenting
an offer on one’s own listing.
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HANDLING SINGLE AND MULTIPLE
COUNTER OFFERS
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Be sure to have a copy of the counter
offer form with you when you have this
discussion.
What to do if the buyer’s agent receives
an acceptance without a counter offer
(deliver immediately to the buyer).
© 2011 Cengage Learning
HANDLING SINGLE AND MULTIPLE
COUNTER OFFERS
Steps in preparing a counter offer if
acting as the seller’s agent and how to
best present the counter offer to the
buyers in a calm, logical sequence, if
acting as the buyer’s agent.
© 2011 Cengage Learning
HANDLING SINGLE AND MULTIPLE
COUNTER OFFERS
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How to represent the sellers when they
have received multiple offers
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should they accept the best offer
issue multiple counter offers
or counter the offer they feel is the most
worthy
Potential for litigation and hard feelings
if multiple offers are not presented fairly
and handled properly.
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BUYERS ESTIMATED CLOSING COSTS
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Issue of closing costs to the buyers’
attention.
Giving the buyers a written estimate of
their closing costs as early as possible.
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SETTING UP THE ESCROW TIMELINE
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Duties and responsibilities of each party
to the escrow.
Differences in escrow procedures
between southern and northern
California.
Does this impact the escrow timeline?
© 2011 Cengage Learning