Congratulations! You’ve received your first offer.
There are multiple things to consider, in addition to price, that you’ll need to understand to make an informed decision on whether an offer works for you. Dawn will personally sit down with you to go over all the specifics.
Here are the primary factors that make up each offer:
Offer price:
The main criteria most Sellers look at is how much a buyer is willing to give them for their home. Obviously price is important, but it needs to be weighed along with everything else to determine if the offer is solid and meets your needs.
Closing date:
The normal time, from when an offer is accepted, to when your house officially is sold, is approximately 30 to 45 days. In today’s Seller Market environment, competitive offers usually have a close time of 15-21 days (if with a loan). This timeframe can vary depending on a number of things. If a buyer is offering an all-cash deal, the number of days needed to close will most likely be much shorter. In a Buyers’ Market, a buyer may ask for a longer closing period if they are selling their home, have to give notice on a rental, or if they need additional time to secure their financing.
Earnest money:
Earnest money is the good faith deposit a buyer will put down within in the first few days of the contract being accepted. Also called an EMD, these funds show commitment and good faith on the part of the buyer to purchase your property. The EMD will be held in an escrow account and ultimately will go toward the down payment. An earnest money deposit of 3% percent is typical. The seller may keep the EMD if the buyer withdraws from the contract for a reason not allowed by the purchase contract.
Down payment:
The down payment is the amount of money the buyer is putting down outside of the amount financed by their mortgage lender. The source of these funds is verified and approved by the lender in advance. Down payments can vary from around 3.5 percent if the buyer is obtaining an FHA loan or between 10 to 20 percent for conventional mortgages. In a competitive environment, higher down payments are usually more attractive to sellers and Listing Agents.
Contingencies:
A buyer can include contingencies for a number of reasons. A contingency means that the final sale of the property is dependent upon certain criteria being met. Typical contingencies are based upon the property appraisal, inspections, and mortgage approval. For example, an appraisal contingency allows the buyer to back out if your home does not appraise at the offered price. A buyer may also ask for a home sale contingency, meaning they will only buy your home if they can sell theirs.
Closing cost credits:
In a Buyers’ Market, a buyer may request that you pay a portion of their closing costs. Typically, a buyer will pay anywhere from 3 to 5 percent of the cost of the home in closing fees. Any portion of the costs a buyer is asking you to pay effectively reduces the offer price.
Home warranty:
Some buyers may ask that the seller provide a home warranty, which covers any unforeseen issues that may arise once the home changes hands. A home warranty can cost between $400 and $1,000 and will be deducted from your total proceeds at the time of sale.
Personal property:
A buyer may request that certain personal items may or may not be included in the sale of the home be added as part of the contract. This could be anything from furnishings to appliances. As these are your personal belongings, you are under no obligation to accept this request.
Once we discuss each offer in its entirety, you have three options:
- Accept the offer as is
- Counter the offer
- Decline the offer
Should you choose to counter, be prepared for the additional time involved during this negotiation process. It is also possible that the buyer may find your proposal not to their liking.
What happens if you can’t come to an agreement with a buyer? This is always a possibility, but walking away is always better than accepting a contract that makes you uncomfortable. One of Dawn’s favorite sayings is, “The power in negotiations is in the ability to walk away…the skill is never having to!”
Negotiating is an art form that is learned, and only mastered through experience. Dawn will offer her insights, expertise, and guidance along with her fierce negotiation skills to arrive at the best possible outcome, but on rare occasions we may not be able to reach an agreement.
If this is the case, The Dawn Thomas Team will forge ahead, continuing to show your property, host open houses, and market your home. More offers will come in and one will be the right offer.
Now onto Step 4 in the selling process, What Happens Once You’ve Accepted an Offer.
