Arguably the most complicated – and the most dreaded – step in the home selling process involves the purchase offer, and whether you’re going to accept or reject it. You may consider your preparations and marketing plan successful when you receive offers from buyers who are interested in purchasing your home. Go ahead, tap yourself on the back for a job well done!
So now that you’ve received a purchase offer, the question is: Will you accept or reject it?
Evaluate Purchase Offers
When you receive an offer, you are entering into a new step in the process called negotiations. The proper response to an offer isn’t a mere “yes” or “no”. A lot of factors need to be studied, and it is your responsibility as the seller to evaluate the terms of the offer. Receiving an offer that exceeds your listing price and agrees to all of your conditions is a dream, so it’s not really easy to accept an offer immediately.
The Realtor will serve as your best partner in looking at the offer. Expect your agent to explain the details of the offer to you so that you’ll be able to understand how the offer compares to the prevailing market conditions. If you are familiar with the differences between the various types of markets, you may have an idea whether the offer price is good or not. Regardless of what you know, you may rest assured that your Realtor will have your back.
The buyer’s offer includes terms of financing, which the buyer should be able to fulfill. The Realtor may look at the pre-approval letter and coordinate with the buyer’s lender and agent, so that the capacity of the buyer to fulfill financial obligations may be assessed.
Considerations in a Purchase Offer
After your Realtor has determined the buyer’s loan qualification, start looking deeper into the offer by assessing the following factors:
- Nearness of the offer price to your asking (or listing) price
- Amount of earnest money deposit enclosed with the purchase offer
- Request of buyer to split closing costs
- Request of buyer for repairs or credit for repairs
- Settlement date in agreement to your own needs
Responding to the Offer
Before you give your approval or outright reject the offer, you should answer some questions first:
- Are there any other offers that you may need to consider?
- Is it possible to wait for more offers from other interested buyers?
- What will you do if there are no other offers after setting a cutoff date?
Making a Counteroffer
Although you may be familiar with two possible answers to an offer – accepting or declining it – there’s a third option: making a counteroffer. It’s possible that you accept every inch of the offer except for a few conditions. You may send a counteroffer to the buyer, stipulating what you want the conditions to contain.
It’s a good idea to talk to your Realtor about negotiating for a new set of conditions in the counteroffer. The agent will base his / her recommendations on how your home figures in the market, although expect some compromises as you go along with the home selling process.
Your counteroffer could speed up the negotiations if you clearly define your preferences – your desired settlement date, possibility of rent-back option from the next owner of the house, or something related to your financial needs.
Your negotiations can go more smoothly if you have a clear sense of your own priorities, such as a particular settlement date, the ability to rent-back your home from your buyers, or a minimum price that you need to achieve to meet your financial goals. If you’re expecting a lot of offers with different price points, ask your Realtor to present the corresponding net profits for each offer.
The negotiating table may be a complicated series of offers, counteroffers, and even counter counteroffers! Despite the confusion, it’s important to establish a good professional relationship with the buyer. That way, the home selling process will be completed without a hitch and with both of you getting what you want through the deal.
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