how to write an offer
Create a "Transaction" - From the listing on NWMLS click the TransactionDesk shortcut
Add Details - Define the offer details that will be used to pre-fill the purchase price, offer expiration date, etc.
Add Details and Contacts - Define the contacts that will either sign or review; save them to your contacts.
Add Forms - Add the NWMLS forms you want to auto-fill, e.g. the purchase and sale agreement, inspection, etc.
Add Documents - Add some of the seller documents the listing agent uploaded, e.g. the legal description.
Edit Forms - After you setup the transactions, you an click into each form to edit it and save your changes.
Reference the Listing - Check back to the listing on NWMLS to see offer instructions, title and escrow info, etc.
Create a Signing - From the dashboard click "Signings" and then click the + icon.
Edit the Signing - Add contacts, order the paperwork, add text that does not autofill, missing initials, etc.
Send the Offer - Email the listing agent a PDF of the signed offer, and cc both firm's document delivery email.
Changing Terms - You can cross things out and write new things above them, and all parties initial next to it.
Adding Addenda - As long as the information matches the purchase and sale agreement, you can add new addenda.
You can credit your commission in one of two ways:
1. You can credit it against buyer closing costs. You can only credit up to the total of the closing costs. For example, if there are $10,000 in buyer paid closing costs and the commission is $15,000, you can only credit $10,000. If you go this route, you do the credit near the end of the transaction on the commission disbursement form (CDF). Please let our team know at docs@pellego.com and we will prepare the CDF for you.
2. You can credit it back to the seller. In this way, the seller pays less commission, so their net take home is higher. You can do this with a blank form 34.
You can put this in a blank form 34 or in the other section on the 22D.
Yes, the Buyer may withdraw an offer (or counter offer) until the seller signs and the listing broker delivers it back to the buyer and other parties. You can do this with the Offer/Counteroffer Withdrawal (form 36A).
[UPDATE NUMBERS BEFORE PUBLISHING]
From analyzing 13,000 flips in greater Seattle-area since 2002, we find that on average, MLS-purchased flips sell for 1.8x their purchase price compared with 1.6x off-market and 1.4x at foreclosure auctions.
While we do not know the condition of these flips, we think if anything MLS-purchased flips are in better condition, not worse. Furthermore, off-market deals often have an assignment fee and foreclosure deals have a commission paid on top of the purchase price, which makes MLS deals even more favorable than the numbers suggest.
Our guts tell us that this feels off, and to some extent this is true. The opportunity for luck is greater in these markets, and the top 10% of off-market flips perform better than the top 10% of MLS-purchased flips. Nevertheless, the MLS still presents a meaningful buying advantage for rehab investors.
This suggest there is more supply (deals) relative to demand (competing buyers) when shopping for deals on the MLS versus off market or at foreclosure auction.
From a supply perspective, 4_% of historical flips were purchased from the MLS versus 3_% off-market and 2_% at a foreclosure auction. With more supply, the MLS can absorb more demand.
From a demand perspective, we can say there's roughly 87% of the relative demand off-market as measured by the resale multiples (1.4 / 1.6). Because there are 1.25x more deals on the MLS than off-market (4_% / 3_%), we can deduce there is about 1.09x more demand (87% * 1.25).
In other words, there is 1.09x more demand on the MLS, but 1.25x more supply to absorb it.
We can't say for sure, but we have some theories as to why there is less competition on the MLS than it might appear.
For starters, prospective homeowners cannot easily finance properties that need repairs, and when they do compete it is normally for cosmetic flip opportunities. Many sellers also over price their listings and end up accepting a lowball offer—think of it as a hidden supply on the MLS.
The demand for off-market deals is also is also higher than it appear. From intuition and the advice of others, investors gravitate to the idea that buying off-market or at the auction is less-competitive. The problem is that everyone thinks this way.
In many cases, investors are purchasing overlapping mailing listings and calling on the same FSBO directories.
This is not to say you should only pursue MLS-listed opportunities. Rather, we believe the MLS should be an active source of opportunities for serious investors. From analyzing 13,000 flips in greater Seattle-area since 2002, we find that on average, MLS-purchased flips sell for 1.8x their purchase price compared with 1.6x off-market and 1.4x at foreclosure auctions.
If you are amazing, we want to know. Here is a list of current openings, and we are always open to unsolicited pitches.
Start by pulling up the listing on NWMLS. To the right of the photos you can find action items for the listing.
Click the the pen and paper icon below the whistle to create a "Transaction" in TransactionDesk. Click this.
From here, you will be guided through a 5-step wizard to add the information and paperwork.
The information you input in the first two steps will auto-fill the paperwork in the final steps.
The first step is the details. Scroll down to the bottom of this section to define the purchase price, offer date, expiration date, and closing date.
Tip: You can leave the closing date blank and write it in when you edit the forms or execute the signing.
Tip: We recommend setting a closing date in the middle of the week so a detail doesn't cross into the weekend.
Add blank paperwork that will be auto filled with the details above. Here are some common forms
21 (Purchase and Sale Agreement)
22A (Financing Addendum)
35 (Inspection Addendum)
There are a lot of other forms you may want to add. Here is a guide to Common NWMLS Addenda and Forms.
Tip: Form 21 is for single family houses. If the property is a multifamily property, use form 20. For vacant land use form 25. For condos use form 28.
Listing brokers normally upload documents to a listing.
These include things like the preliminary title report, which you do not need in your offer, along with some documents you do need.
Since almost all offers use a 22K (Utilities) and a 22J (Lead Paint - homes before 1978), a seller signed copy is often uploaded.
There is normally also a Legal Description (Exhibit A) along with a Seller Disclosure Statement (Form 17) that you should include.
In this example screenshot, the listing is missing Form 17 and has an oddly named addendum the seller may want us to sign.
From the transaction dashboard, in the forms section, click on the form you wish to edit. You can now edit anything in light blue, click checkboxes, etc.
After you edit the form, click the x in the top right to save and close the form. You can also save it from the folder dropdown on the left.
In terms of what to edit, reference our other guides, such as our write up on Purchase and Sale Agreements and Common Addenda.
Tip: you can annotate the forms during the signing as well, but it is more cumbersome than editing the base forms themselves.
When filling out the forms, it is worth checking the listing for any instructions or requests from the listing broker/seller.
For example, the listing may reference the title company where preliminary title has been opened (add to line 9 on form 21), and the closing agent (company and individual, add to line 10).
Sometimes listing agents will also upload specific offer instructions or custom forms to the documents section. You can check these by clicking the the documents icon to the right of the photos.
From the Transaction Dashboard, click Signings on the right side. This will bring you to page where all signing related the transaction will be, e.g. counter offers.
The first time you click in there will be no signings.
Click the + icon to create a new signing and name it something like "Smith Offer - 123 Main St, Seattle (MLS 123456)
From here you will be able to add signers, reviewers, paperwork, signatures, annotation, etc. before your client e-signs it.
After you create and name the signing, you can start editting it.
First add the signers. If they are already contacts on the transaction, select add from transaction.
If you are a new licensee and would like your managing broker to review the signing, add a participant and mark them as a "Reviewer."
Tip: If you would like them to review before it goes to your client, add a signing order with your managing broker before the client.
It always looks unprofessional and sloppy if your paperwork is not in alphanumeric order. That means the 22J goes before the 22K.
Besides looking sloppy, not ordering your paperwork makes your offer seem less serious. It's not required but it is a big pet peeve for some brokers.
To order your documents, click DOCS and drag them in the correct place.
The only exception to this is the form 17, which is not an addendum, so it goes at the end. After that the Legal Description (Exhibit A).
When listing agents upload seller signed forms, such as the 22K (Utilities), 22J (Lead Paint), and 17 (Seller Disclosure), the fields will not always autofill correctly, the Buyer section is blank on this example document.
To add the Buyer name, click TEXT BOX under the Markup section.
Do not use text line in signer actions, because then your client will need to fill it out, and if they fill it out wrong, you will need to redo it.
If you want to cross out a section, you can use the line markup.
If it is the first signing, your clients do not need to initial next to the cross out. If it is an amendment (e.g. counter offer) it needs initials and date.
Add missing signatures, initials, dates, checkboxes, etc.
For Seller Disclosure (Form 17) there are three options to sign. It is common to sign the fist and/or the first two. The third should be signed if the disclosure is not complete and the buyer is okay with that.
On the Legal Description add initials and dates for each buyer signer.
When you add a signature or initials, Authentisign will automatically add a date field which you can drag to the appropriate spot.
After you and your client sign the offer, Authentisign will email you a link to download a PDF of the signing (the offer).
Email the listing agent and attach the PDF offer and cc the document delivery email for both firms. You can find this at the bottom of the first page of the Purchase and Sale Agreement. Ours is docs@pellego.com.
If the buyer has it, attach the the pre-approval letter or proof of funds.
The email can say whatever you want. If the agent is getting a lot of offers, you may want to bullet point the offer specifics for their convenience.
Your main goal in communication is that the listing agent thinks you are reliable and your buyer is committed to closing.
For most counter offers, you will cross things out, write in the new information, and initial and date next to each change.
By default, each time a new version of the offer is sent in, the other party has two days to accept it. If you wish to change this, cross out the old offer expiration date and write in a new one (initialed and dated).
If this gets messy, you can send in a new offer. You can do this from the Transaction Dashboard by editing the forms and/or copying the last signing.
In some cases, one party may want to introduce a new addenda, either during the counter offer stage or the Contract to Close stage.
The new addenda reference the Purchase and Sale Agreement by having the same address, contract date, buyer name, and seller name.
