In North Carolina, a Memo To Buyer utilizes NC Realtors Form 340-T. This form rejects a buyer’s offer and informs the buyer of what a seller is would find favorable in receiving an offer. This may include terms, price, or closing dates.
Speaker 1: What is a Memo to Buyer?
Speaker 2: So a Memo to Buyer is a really unique way that you can correspond with agents and buyers. North Carolina has an official form, it’s called the 340-T, and it’s real explicit. It says in there, this is not a counter, it does not obligate the seller to what we say here. It’s kind of like a wishlist, and, let me tell you where you would use this.
If you have a situation where, let’s say you have a complicated land deal, and there is a complicated offer to purchase, you don’t want to obligate the seller to some kind of counter. So what you could do is say, “We reject the offer that you’ve made, but we liked these elements of the contract. What we didn’t like were these elements of the contract, and we’re not saying that we would take this, but we would prefer you to be more in the $50,000 deposit range. We would prefer you to be more in the 90 day closing. We would prefer that you only have three 30 day extensions instead of five.” And so it’s a way of getting the buyers and the sellers closer to a purchase point without obligating the seller to an actual counter.
So it’s very, very useful in the land game. It can also be useful in the residential game because, if you want to play hardball, in this market, you could be in a multiple offer situation where we get five offers at the same time. And, let’s say you have the house listed for 375 and all five offers come in above 375. And let’s say your best offer is 395. And let’s say the best due diligence offer was $20,000. You could come back and you could patch and quilt all these offers together to make your dream offer. And you can say, “you know, we’ve reviewed all the offers. We think that we would be happiest with $400,000 purchase price, and we want $25,000 due diligence money.” We may or may not get it, but we’ve communicated to the other side that that would be something that would interest us because of the activity, and allows multiple parties to step up and not obligate the seller to anything.
The other thing, the reason why Memo to Buyer is so important is because of the non obligatory nature of it. Usually a residential property, we’re going to work out the details in less than 24 hours time. They’re going to make us an offer. We’re going to ping pong back and forth maybe, or we’re going to accept it. But usually in the residential game, we are getting a property under contract rather quickly.
Land is much different. There’s so much different elements to the negotiation of land, that it’s not uncommon for me to take a week before we actually iron everything out and put it under contract. And so, because it takes such a long time, let’s say I have a super hot piece of land, we give a Memo to Buyer message to someone that’s made an offer, or someone that’s done a letter of intent, and they can come back and we’re waiting for them to give us some kind of response. Well, in the meantime, this offer comes in that’s everything that we want. We’re not obligated to that Memo to Buyer now, and we can go under contract with those people.
So Memo to Buyer is a tool that I don’t think is utilized enough. This is such a hot market. You want to be careful about your counters and having dangling counters. I think Memo to Buyer is a useful tool.
