The importance of understanding and evaluating the entirety of an offer.
Offer Price is obviously very important in evaluating an offer on your home but sometimes it isn’t the deciding factor, specially, when you are multiple offers! Naturally, a home seller will gravitate towards the highest priced offer. What if you are fortunate enough to have multiple offers that are relatively close in number? Sometimes the highest bid isn’t necessarily the best offer! Let’s analyze all the factors that you should consider before accepting an offer on your home.
Is the buyer pre-approved? Let’s start with the basics! Even the best price will quickly lose its luster if your buyer can’t come up with the funds on closing day. To protect yourself, make sure the offer specifies that the buyer has been pre-approved for a mortgage big enough to purchase your home. Tip: ask for DU letter and proof of funds!
Size of the deposit. A serious sales offer comes with a deposit (also known as “earnest money” or “a binder”) which is held in trust by your lawyer or the buyer’s real estate agent until the closing date. It can be anywhere from 1 to 10 percent of the selling price, but a higher percentage indicates a higher commitment on the part of the buyer.
Timing. A closing date that meets your requirements, such as your need to move right away, or at the end of your child’s school year, might be worth more to you than the highest price.
Inspections and repairs. Most sales goes through an inspection period. Home insurance companies require an inspection to determine how much coverage will be. More importantly, it helps determine in what kind of shape the house is in and if it’s a good financial investment. In a sellers’ market, with multiple offers in hand, you may have the leverage to negotiate that offer is non-contingent of inspection. It doesn’t mean they don’t conduct an inspection but the sale does not hinge on that inspection.
Contingencies. The main contingencies customarily seen in offers are inspection contingency, appraisal contingency and loan contingencies. If your property is receiving multiple offers, you may try to negotiate any of these contingencies out of the contract. Removing these contingencies improves the chances you close the deal.
Who pays for what. Almost every aspect of a real estate sales/purchase contract can be negotiated. Items such as, closing costs, title insurance, real estate commission, and price just to name of few. If price between multiple offers are relatively close, these other items can make a impactful difference in your decision.
Items included in the deal. Most buyers expect you to include everything permanently installed or attached to your property, such as light fixtures or a built-in dishwasher. The selling price should be slightly higher if your buyer also wants items such as your refrigerator, washer-dryer, chandeliers, furniture and curtains.
It is important to sit down with a good broker to evaluate an offer. Our Team at Premier Flat fee will gladly review each offer you will receive and explain what every clause will mean to your bottom line. We are also skilled negotiators. We can often respond to an unacceptable offer with a successful counter-offer that includes a better price or fewer conditions.