When an offer comes in from a buyer, the first component that sellers will typically look at is the offer price. Naturally, the offer price is the first thing that catches sellers’ attention, and rightfully so. But as important as this number is, there are other factors that should be assessed in an offer. There are also certain ways to effectively handle an offer situation to help ensure a successful outcome.
Here are some tips to effectively dealing with an offer on your home.
Assess Whether the Offer Price Will Match the Appraisal
You may be very excited about the offer price, but you’ll want to make sure that it matches the actual market value of your property, particularly if the offer price is over asking. This typically occurs in multiple offer situations where several buyers are bidding on the same property at the same time. Situations like these can drive up the price of a home, but sometimes the price can go so high that it won’t match the appraised value.
When the buyer goes back to the lender with the purchase agreement, an appraiser will be sent out to the home to make sure the price accepted is in line with the property’s actual value according to current market conditions. If the appraisal comes in low, the buyer may not be able to get approved for a mortgage, and the deal can fall through. Sellers should always be aware of such potential situations when a really high offer comes in.
Assess All Contingencies
The offer price isn’t the only component of an offer that sellers should get fixated on, even though it is a crucial factor. Sellers should also pay close attention to the contingencies that are included. While some contingencies are pretty standard and are typically recommended by agents to include – such as financing and home inspection contingencies – others might make the deal a little more complicated or even drag out the process unnecessarily.
For instance, some buyers might include contingencies that allow them time to sell their own home first. That way they would not be obligated to go through with the sale if they are unable to find a buyer for their current property. While this might be a good deal for the buyer, it would put the seller in a precarious position, because there may be other offers that could be entertained that the seller may be missing out on. And if the buyer never actually ends up selling their own home, the seller will wind up back at square one.
Be sure to go over all contingencies carefully with your agent to determine whether or not you’d like to cross any out, or amend any that you don’t mind leaving in.
Review the Closing Date
Every part of the offer might look great to you, but what if the closing date doesn’t jive with your plans? It’s possible that the closing date that the buyer requests is way too close or too far out. If it’s too close, you could be left scrambling to get things and order and move into your next home. On the other hand, a closing date that’s too far out could leave you carrying two mortgages if your new home closes much sooner.
You can always go back to the buyer to amend the closing date to one that works better for you. The date you choose will depend on how soon you’re ready to move out.
Be Prepared to Be Asked to Make Repairs
After an offer has been accepted by both parties, a home inspection will usually take place. During these appointments, home inspectors will carefully assess the condition of the home to uncover any potential issues. If any are detected, the buyer may come back to you and ask that you make the repairs noted in the inspector’s report. Some of these repairs might be minor in nature and won’t take much time or effort to complete.
Others, on the other hand, may be more involved and expensive. In this case, you need to determine whether you want to take on this extra work, or reduce the price slightly so that the buyer can take care of the repairs themselves. Alternatively, you may not agree to either situation, in which case the buyer will need to decide whether or not to go through with the deal based on the issues discovered with the home.
Don’t Be Quick to Throw Out a Deal
It happens time and time again in the world of real estate: buyers will try their hand at a lowball offer in hopes of getting a great deal on a home. Sure, this can be incredibly insulting and upsetting to a seller, which can prompt sellers to automatically throw the deal out in response. Many sellers might not want to even consider entertaining an offer that is so far below the asking price.
But don’t be too quick to toss an offer out the window. There’s no harm in countering an offer, even if it’s considered a “lowball” offer. Perhaps the buyer is just trying to see how far they can go and are testing you to see what you would accept. If you counter, the buyer will quickly know where they stand in the offer situation and can respond as they see fit.
You just never know if a meeting of the minds can actually take place in a situation like this, even if the process starts off with an offer well below the asking price.
What if You’re not Satisfied With the Offer?
If you are not entirely sold on the offer in front of you and are not sure if you should accept it or not, consider some of your options. For starters, consider whether or not you have time to wait around for another potential offer to come in. If so, you don’t have to feel obligated to continue entertaining an offer that doesn’t really seem to be going in the direction you want it to.
Also, consider whether or not there’s the potential for other offers to come in shortly, especially if there’s been a lot of action on your home and the market is in favor of sellers. If so, you could take a gamble and wait for a better offer to come in, though there is always a certain amount of risk associated with this decision. Just be sure to consult with your agent in order to make the most sound decision before choosing which path to take.
Keep Your Emotions in Check
Buying and selling residential real estate is an emotionally-charged situation, especially for sellers who are parting with their beloved homes. Having said that, it’s critical that sellers control their emotions, especially if lowball offers come in or if buyers make critical comments about the property during visits or open houses.
If you let your emotions get the better of you, it’s very possible that your better judgment will be clouded, which will ultimately affect your decisions. To make sure the decisions you make are sound ones, it’s important to keep your emotions under control throughout the entire offer process.
The Bottom Line
How you handle offers is a critical step in the sales process. You and your agent have worked so hard to get to the point of attracting offers on your home, so you want to be sure to deal with them as effectively as you can. Consider the aforementioned tips, and as always, heed the advice of your real estate agent when an offer finally comes in.