Whoa, doggies! It’s finally happened! Your agent calls to tell
you you’ve received an offer on your home. Golly, gee whiz. When
you listed it, you were sure it would sell in a week or so. You had
fixed it up and cleaned out, and painted the front door and planted
flowers in the yard. It looked great! And naturally, it’s the best
home on the block.
pWhoa, doggies! It’s finally happened! Your agent calls to tell you you’ve received an offer on your home. Golly, gee whiz. When you listed it, you were sure it would sell in a week or so. You had fixed it up and cleaned out, and painted the front door and planted flowers in the yard. It looked great! And naturally, it’s the best home on the block.
But here it is three months later and you’re anxious. It’s terrible spending large chunks of your time sipping coffee at Jerry’s or wandering the aisles of Target while strangers walk through your home. You can’t work on projects because you don’t want to leave clutter lying around. You can’t find things easily because they have been “put away” by another member of the family. Every time a dish is used, an item of clothing is worn or a letter is delivered it has to be dealt with. Laundry out of the dryer has to be folded and put away immediately. In addition, you have your eye on a great property in your destination area, and you’ve been afraid someone else will buy it before you get your current home sold.
But an offer is here! And – as is not uncommon – there is another couple who has looked at the property twice who seem very interested. It never rains’ til it pours. (This spring it seems to be pouring a lot, doesn’t it? Don’t get me started on the mud.)
Here comes your agent with a huge pile of papers for you to assess. “What? Just tell me the basics,” you think. But it just isn’t that easy. There are many factors to consider when analyzing an offer.
Of course, there’s the purchase price. But let’s imagine that the buyers have offered full price. That’s good, isn’t it?
Well, maybe. There are lots of factors influencing the original purchase price. Let’s look at a few of them.
Perhaps the buyer is requesting that you, as the seller, pay some of their non-recurring closing costs. This frequently happens when the buyer qualifies for a mortgage but cannot come up with much cash. This amount can be quite high depending on the mortgage requirements. It can include the cost of the appraisal and points needed to buy down the percentage rate of the loan.
The length of the escrow period can influence your total financial picture as well. If you have to wait 90 days to close, you will be paying your mortgage and property taxes for that amount of time. If the deal closes in 30 days, you’ll be off and running with the proceeds in your pocket.
During the inspection period, the buyer could come up with a list of twenty million things they want fixed or repaired. Or they might think the house looks great and everything’s a go. It’s hard to guess ahead of time what they may request. A good Realtor will attempt to limit a seller’s financial exposure, and negotiate each item as it comes up. But this could add significantly to your costs incurred at closing.
An additional area of concern is the financing. If the buyer is getting 100 percent financing, the deal is riskier than if they have a substantial down payment. (The more money down, the more the mortgage lender likes it because there is less chance of the buyer defaulting down the road.) However, many deals like that have closed, so it shouldn’t necessarily be a deal-breaker. But if at the last minute the loan is not able to be funded, you as the seller will be the one with the packed-up house and nowhere to go.
Most deals will be contingent on the house appraising for the purchase price. This makes sense because the mortgage lender or bank wants to protect its financial interest. They don’t want to loan more money than the property is worth should the buyer default on payment and force the home to be foreclosed. If the appraisal comes up short, either the buyer or the seller (or a combination of the two) will have to step up to the plate and make up the difference. This is not happening frequently now that the prices have stopped leapfrogging up in bounds, but it is still something to take into consideration.
You also have to look at what’s included in the deal. Are they asking for the refrigerator, washer and dryer, the bedspread that matches the drapes, the lawn furniture and the family cat? (Don’t laugh…strange things happen in the world of real estate.) Lenders don’t like to see these things in a contract. They only want to lend on the house itself, not on personal property.
You might also have to look at what’s not included in the deal. If you planned on leaving the washer, dryer, refrigerator, etc. and they specifically exclude them, you’ll have to arrange for them to be removed.
So you see, not all offers are equal. And not all Realtors are, either! Make sure you have a great local real estate agent on your team. Then no matter what pops up in a transaction, you will be in good hands.
And be kind to your Realtor!
