So you’ve done a ton work getting your house ready to sell, your agent has put a rock solid marketing campaign into motion, so the next thing you’re expecting is a bunch of offers on your beautiful home.
But, before we get too carried away with all the action, let’s go over some important tips when it comes to comparing, evaluating, and choosing the right offer.
1. Know how the process works
Most likely, none of the offers will be “exactly” what you want, and that is fine. When you receive an offer you have a few options. You can ACCEPT the offer, DENY the offer, or in most cases, you will probably write a COUNTER OFFER.
When writing a counter offer, you can request any number of changes to the terms including purchase price, days of escrow, lease-back, date of possession.
Once the buyer receives your counter offer, the ball is in their court. They can accept, deny, or counter you back. This process goes on until an agreement is reached. In my experience there are usually 1 or 2 counters, but every now and then a buyer and seller will go back and forth many times before reaching an agreement.
2. Dig in
There’s a lot of money on the line, so we need to go into negotiations knowing exactly what we want. If price is your main concern, then you may need to be flexible on closing date, or if you need a contingency then you may need to give a little on price.
It’s not always about the bottom line, so you need to keep your needs as a seller in mind when evaluating offers. Ultimately we are looking for a buyer who’s needs and means mesh with yours.
3. Establish an Offer Review Process
If we’ve done our research and marketing right, then we should be expecting multiple offers. However, they probably won’t all come on the same day, so we need to have a plan about how to review them.
You may consider reviewing all offers at the end of the week instead of trying to respond to every offer without the context of the others. You can sit down with your agent and go over all of them together, carefully weighing all the pros and cons.
4. Consider Requiring Cross-Qualifications
Submitting a pre-approval with an offer is pretty much standard practice in the market right now. The reason that most sellers require pre-approvals is because they do not want to enter into a purchase contract with a buyer who may not actually be able to perform, which could potentially cost the seller weeks of market time as they will need to start all over again with a new buyer.
But, what is a pre-approval really? Well, it’s a letter from a lender stating that “so-and-so” is qualified for a mortgage up to some dollar amount. That’s right, it’s just a letter.
The problem with this is that a lender could have written a pre-approval without taking a lot of important factors into consideration. Or worse, maybe they based it off of information stated by the buyer, rather than actual documentation.
To avoid any potential funding problems on the buyer’s part, you may want to require all of the buyers submitting offers to cross-qualify with your preferred lender. This does not mean that they have to use your lender, but simply means that you can feel safer knowing that your own lender did the due diligence.
Most Realtors have a working relationship with a lender they trust. These lenders are usually happy to do cross-qualifications as a favor to your Realtor
5. Keep a Cool Head
Selling your home can be very emotional, especially if you have lived there for a long time. It’s easy to get offended when a buyer submits a lowball offer claiming that the kitchen needs to be remodeled, or the wood flooring is 20 years past refinishing. How can it be that bad? You’ve lived here forever and still love it.
Well, it’s not just you. Just keep in mind that these critiques from the buyer are most likely negotiating tactics. They need to give you “something” in terms of justification for their lowball offer.
However, be careful not to be blinded by love. You have an emotional attachment to your house that no one else has… or shares. This is a “business” transaction, so make sure you keep your expectations objective and realistic. If the kitchen really is old and dated, don’t expect to get the same sales price as the newly renovated home on the corner did.
6. Go over every detail
Of course you want the highest price you can get for your home, but like we talked about above, there are a lot more terms that should all be taken under consideration together.
Does the buyer want the appliances or any other personal property that you were planning to take with you?
Is the earnest money deposit significant? This is the deposit that a buyer offers to put up at the beginning of escrow. If the buyer does not perform per the contract and tries to cancel the transaction without valid reason, the seller is entitled to the buyer’s deposit. This helps protects the seller from buyer’s who are not serious about the purchase.
Does the buyer have a solid pre-approval? Are they willing to cross-qualify with your lender? There is almost always a loan contingency written into a purchase contract, which protects the buyer if they fail to obtain a mortgage. It’s wise to take steps to insure that the offer you accept is from a buyer that can actually perform.
As you analyze the details of each offer, think about whether each term is a deal-breaker or not. Take all the terms into consideration when comparing offers to one another.
7. Think Outside the Box
You may receive offers that you don’t like for any number of reasons. Ask your agent to find out what is most important to the buyer. You may find out that the buyer needs to close on a house quickly, so if you can be flexible on the closing date it may allow you to stay firm on the price. Often, staying flexible and creative in negotiations will help you get closer to your ideal outcome.