How to Evaluate an Offer on Your Home

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For most homeowners selling their home the thought of negotiating an incoming offer is a matter of settling in on a price that both sides can agree upon.  But did you know that there is another key aspect of negotiations aside from price that could have even greater impact on the sale?  The terms of your contract hold equal weight and importance as price in the sale of your home and are critical to a successful sale.

Here are five essential things to consider when navigating through the negotiation process after an offer comes in on your home.

Preapproval 
After the housing market crashed in 2007 lenders, buyers and sellers have proceeded very cautiously. Lenders are staunchly following stringent requirements, buyers and sellers are savvier than ever before and what seemed like formalities in the process before are now becoming necessities.  Preapprovals are one of the things that did not always need to be done in advance of buyers finding a home. But as you receive your offer on your property, be sure that your buyer has a preapproval from a reputable lender.  The letter should indicate what the buyer can afford and how much the lender is willing to loan them, assuming they meet all requirements at the time of application.

Down Payment 
One of the requirements lenders have today is to have an appraisal done on the home to equate its value with the selling price.  Unless the buyer has a significant down payment available, a less than ideal appraisal can stand to affect the sale altogether, even causing the deal to break down.  Check to see how much your buyer is able to put down on the house and add up the down payment with the loan amount to see if they equal your asking price.

Existing Home 
Does the buyer have an existing home they need to sell?  This can be a problem for you as a seller if they want to include a contingency in the contract that absolves them from the commitment of buying your home if their home does not sell.  This can wreak havoc on the sale of your property, as it would require you to leave the terms of your sale up to the success of another sale.  It would be best to avoid offers that include existing home contingencies.

Closing Date 
When does the buyer want to close on the home?  If the requested closing date extends beyond 90 to 120 days then it might be time to reconsider the offer.  Lenders have timing guidelines that dictate a 45-day policy, within which buyers must apply for a loan before closing.  Anything longer than that would get in the way of the lenders’ policy leaving the seller hanging in limbo during those off weeks.  When a buyer cannot meet the contractual obligation to get a commitment within 45 days, it might be a good idea to forego the offer altogether rather than to risk the sale.

Cash Transaction

Some buyers offer cash rather than opt for financing and though it is an attractive offer at first, you need to make sure that the buyer has the cash.  Asking your Realtor to verify the availability of those funds will become a necessary additional step before you can move on in the offer.  In some cases, buyers opt for alternative financing and when the time comes to verify the funds they are unable to do so.  The risk is too great so unless you can be sure the cash is there, it is a better idea to move on to the next offer.

Navigating through offers is a tricky process – especially in today’s market. It is no longer just a matter of coming to agreement on a sale price, rather both parties must agree to all aspects of the terms.  For customized guidance on your real estate endeavors, contact us today!

Buyer's Agents vs Seller's Agents

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When a buyer stumbles upon a home they might be interested in, they also stumble upon an agent when they call the one listed on the “for sale” sign.  In some cases that buyer ends up using the same listing agent for their purchase.  Little do they know that there is a clear distinction between the skill set of each real estate transaction’s side.  While there are double agents that are equipped to handle both sides of the fence, many Realtors deal primarily with either buying or selling transactions. 

What is the difference between the two and how can you protect your interests so that you end up getting the best terms and the most optimal outcome?  Here is some information to help discern the two plus some tips to follow when looking for the perfect agent for you.

Though Realtors go through the same licensing process regardless of whether they opt for a dual-transaction role or choose only one side, there are some distinct differences in the handling of each type of transaction. 

Buyer’s Real Estate Agent

In most cases, the process of buying a home is a pleasant one.  There is usually no negative stigma attached as there might be for someone selling against their wishes in case of job loss, relocation or financial struggle.  Buyers are in the process of seeking a new home, they enjoy looking at potential properties and their active involvement keeps things interesting.  Working with their agent, they strive to find a home that meets or exceeds all their expectations and see far ahead into the future with the prospective properties as they consider the years of enjoyment the new home will bring to their lives.  The primary role of a Realtor for buyers is to assist in locating the perfect home and to negotiate the best price possible on the home.

TIP:  Depending on whether the agent is associated with a brokerage with added incentives to sell an in-house property, you may or may not get enough visibility of outside properties.  When hiring an agent, be sure to make clear that you expect to see a wide range and variety of homes, including but not limited to the ones listed by the same brokerage.

Seller’s Real Estate Agent

Unlike the buying process, a seller’s agent must assist homeowners with finding solutions and getting their home sold.  This can often begin with a walk-through of the home that ends up in suggestions given to the homeowners about how to improve the property and prepare it for sale.  Sellers usually do not have the same level of enjoyment as buyers do unless there is a situation of buying up into a better home.  Even then the process the selling can be quite harrowing considering the number of prospective buyers that will visit the property.  Compounding the stress is when fewer than expected buyers appear interested in the home.  Another aspect of a seller agent’s dealing with clients that differs from a buying agent is the difficult process of helping sellers stay realistic when pricing their home – often leading to disappointment and frustration. 

TIP:  When signing a contract with your Realtor, it is important to clearly express that you would like to see each offer that comes through.  Some less than scrupulous agents might hold back low offers to avoid lower commissions. 

When hiring an agent that is right for you it is important to interview at least three agents.  Request a list of references with clients from the last three transactions as opposed to the agent’s standard list of references.  Prior to your meeting, assemble a list of important questions such as “how much time do you devote to your real estate career?” “How accessible are you?” and “what is your marketing strategy?”

When you do find the right one – things should “click”.  They should have energy and enthusiasm. They should be assertive but also willing to listen intently to your needs.  Your agent should be ready and available and reasonably accessible for your convenience.  And at the end of the day, they should work for you to help you achieve the best possible outcome.