Not Every Offer For Your House Is Created Equal

Your Sale May Hinge On Your Offer Evaluation Abilities

We’ve finally arrived. After all of the prep work. The open houses. Showings, showings, showings.

Now the moment we’ve all been waiting for. Purchase offers begin rolling in. Oh the suspense.

As the buyer eagerly awaits your response. And you eagerly go over the details of the offer with your agent.

Wouldn’t it be great if the offer was 100% what you wanted?

But we live in the real world, and we know an offer with exactly what we want is not likely. Not at first at least.

Not all offers are created equal, and most buyers don’t send initial offers to result in an immediate yes from you.

Most offers will require some level of negotiating.

Below are just a few terms of the purchase contract you may want to consider when deciding your counter offer.

The key is to decipher what’s important to the other party.Hint: it’s not always money (it’s usually money, but not always).

Offer Price. This is almost always the starting point. How much did they offer? Was it enough? It’s nice to see a big number here. But look closer. Is the buyer asking for closing credits? A pre-closing move-in? Or do they see your house for the gem it is and presented their offer accordingly? Whatever the case, you have to look beyond the offer price. There are many other elements to the deal that may break down or increase your risk exponentially should you decide to move forward.

Deposit. Some call it a deposit, others call it good faith earnest money, and still others call it a pledge. No matter what you call it, make sure you call it an important number to consider. Does it add or subtract from your bottom line? The answer is a simple, NO. It does nothing for your bottom line. So why does it matter? Because this number will tell you whether their offer is backed up with more than just hopes and dreams. While there is no customary limit. I’ve seen offers come in where the buyers wanted to put $0 for a deposit. And still others that put up the entire purchase price for a deposit. So how much should you offer? Yet another difficult question to answer in a short blog. In fact, an entire blog post could be written on this alone.

Ask yourself this: How easy or difficult would it be for the buyer to walk away from the amount they’re pledging? Is it likely to cause them to lose sleep if they lost that amount of money, or could they walk away maybe upset, but able to move on? Your answer lies somewhere in between. You want the amount to be enough that it would cause the buyer some level of pain should they lose it, but not too much that it’s unreasonable. Your agent can guide you in this aspect.

Inspection and Appraisal Contingency. Most offers will be contingent on a satisfactory inspection. By satisfactory we don’t mean flawless, every house will have some level of issues. Some will be contingent on the appraisal (This one catches a lot of buyers off guard). Let’s focus on the inspection, there are ways to get ahead of this one. We recommend our sellers invest in a pre-listing inspection (yes we said investment). This way they’ll know everything the prospective buyer will know before the buyer knows. We take a proactive approach rather than reactive. Last minute discoveries can really slow down (or kill) a deal that was previously moving full speed ahead. If you have an inspection of your own you can properly disclose and verify disclosures to the buyers in advance.

Buyer Financing. In real estate we know that cash is king. But when you don’t get that mighty cash deal, what kind of financing does the buyer have? Is it FHA, conventional, VA? It could be anything. Just because they have a pre-qualification doesn’t mean they’re pre-approved. How much are they putting down? Do they have sufficient assets to close? What if they need more money to close? If your offer is accompanies with a finance letter make sure your agent calls the lender to get these and other important questions answered before proceeding with a beautiful deal that blows up because the buyer was never pre-approved in the first place.

Everything else. An offer to purchase can have any number of contingencies and addenda and the only way to realistically weigh them out is to decide what will the be the total impact? You have to look at the entire deal, soup to nuts. In a real estate transaction, time is of the essence. If the buyer wants a fast closing, can you pack up, find a new home and move out in time? Maybe. Or what about an extended closing? Are you sure the buyer will still qualify for the mortgage five months down the road?

Then there’s purchases contingent on the sale of the buyer’s home. Ask, how far along is their sale? Do they have an offer? Are their contingencies cleared? Every offer will pose some level of uncertainty. Part of your agent’s job is to go over every detail of the offer with you and weigh the risk with you so you can make an informed counter offer.

Your ultimate success will be in the ability to evaluate an offer or multiple offers and formulate a strategy on the best path forward. And if the path is not totally clear you have your real estate expert to be your Sherpa guide and get you to your destination.

To discuss this or any aspect of sales strategy please give us at Miranda Executive Realty a call. We’re happy to meet for a no-obligation, no-pressure consultation. Whether at our Coral Springs office or in your home.