The negotiation process may seem daunting for a first-time home seller, particularly because accepting an offer is a huge decision. To make sure you don’t regret it later, here are four factors to think about before you accept a bid for your home:
If an offer is lower than the listing price, you need to decide if the cut is something you can accept. If you think the price is too low, consider how long your home has been listed and the current state of the local housing market. Ask your real estate agent about this. Your agent would know about recent sale prices of comparable properties in your neighborhood. This will give you an idea on whether the offer is acceptable, given current market conditions.
The Buyer’s Payment Method
Ask the buyer how they plan to finance the purchase. If they have the cash ready, then you’re in luck, as this is the quickest way to completing a transaction. If not, find out if the buyer has already been pre-approved for a mortgage. Preapproval is a good sign as it means the lender has found the buyer financially capable of obtaining a home loan.
When it comes to residential properties, it is very likely that the buyer will have to sell their own home first before finalizing the purchase of a new home. If the buyer is still trying to sell their property, this could present some risks, as there are many factors at play that are out of your control.
Now that you know how the buyer plans to finance the transaction, you can ask for the time frame. Be realistic. It normally takes around 30 to 50 days for a buyer to secure financing and finalize everything. The occupancy date is also vital in your own preparations to move to your new home.
Another important date to keep track of is your response deadline. When given an offer, you’re also given a set amount of time to reply. The more time you have to make a momentous decision like this, the better.
A contingency is any additional condition that must be fulfilled before the sale can be finalized. If this condition is not met within a specified period, the sales contract may be rendered null and void.
Typically contingencies provide safety nets for the buyer, the seller, or both, such as a timeframe for home inspections, or more specific conditions like securing a conventional 30-year loan within a month. In reviewing an offer, it’s important to look into the buyer’s contingencies, and weigh their impact against those of the other factors of the sale, such as the offer price.
For example, if the buyer is still trying to sell another property to finance the home purchase, they can include a contingency that allows them to back out of the deal if they cannot sell the property at their asking price. You can counter with a kick-out clause, which would allow you, as the seller, to continue to market the home “under contract.” This will give the buyer a window to resolve their house sale contingency while providing you with other options in case the sale falls through.
Working with an experienced agent with strong negotiation skills is very important in helping you make big decisions. Brittany Poppleton and her team can provide you with this kind of expertise. Call Poppleton Properties at (813) 833-2520 or send an email to brittany(at)townchase(dotted)com.