When the land market in Alabama gets good, like it is now, multiple offer situations are becoming more common. I have represented several owners recently who had properties that had been on the market for months with little to no activity, and all of a sudden, multiple buyers are interested. It is a positive trend that I hope continues for the foreseeable future. When you are in a hot market, especially with a good property, here are few tips to help you make a deal or move on to the next prospect quickly. These tips are not legal advice, so consult your attorney for specific answers about your particular situation.
1. Put offers in writing. It may be convenient to make an offer by phone or fire off a text, but there are many things that can go wrong with this method. It is easy for misunderstandings or miscommunication to happen when relaying a “sort of, maybe offer.” You can have your agent put your offer on paper, or draft a Letter of Intent (LOI) that outlines the terms of what you want to offer. The best way not to be misunderstood, is to put it in writing.
2. Don’t leave it open-ended. By putting a very specific amount of time in an offer or counter-offer, you can potentially keep the negotiation moving along effectively. The amount of time you allow for a decision depends on the circumstances, but generally 24-72 hours is sufficient when requesting a response. When written into a contract, this clause will usually read like:, “Buyer requests a response to this offer from the Seller by Friday, April 13, 2018 at 5:00 pm CST. This offer will expire at such time.” Wording like that makes it very clear how long this offer is good for. It is not wise to leave an offer “hanging out there”.
3. Manage from Contract to Close. The most crucial part of the whole real estate transaction is what happens from the time a contract is executed until the parties sit down to close. There are often contingencies such as surveys, percolation tests, home inspections, or loan approval deadlines. A real estate broker earns their money by keeping everything moving forward in the contract period. It is imperative to have close communication between buyer and seller (or their agents), along with lenders and lawyers. Everyone has a role to play, and the agent is the one keeping everyone on task.
In my opinion, contract extensions are to be avoided, if at all possible. There are many examples I could give to illustrate the importance of that last sentence, but my feeling is extensions are generally not good.
Keeping a land purchase moving along on a positive trajectory involves good communication, observing deadlines in the contract, and everyone doing what they agreed to do. A good land broker will help facilitate the transaction, identify potential pitfalls, and work with lenders and attorneys to remove any impediments to a successful close.
Written by: Jonathan Goode is an Accredited Land Consultant (ALC) and licensed land broker in Alabama and Mississippi. He co-hosts the weekly radio program, The Land Show, that covers many of these topics for people interested in buying or selling land in Alabama.