How To Choose the Right Offer When Selling Your Home

You spent weeks (if not months) preparing your home for sale. You painted your walls, staged the home, and did everything possible to increase its curb appeal.

So, it goes without saying that nothing is more exciting to a homeowner than receiving offers from others to purchase the property. It’s the ultimate form of validation that you did things right.

Perhaps you’ve been preparing for this opportunity to move, or you just want the extra cash on hand. Either way, it can be tempting just to give the home to the highest bidder, but this strategy isn’t always the ideal one.

We’re going to go over some preparations and considerations you need to make before finalizing an offer from someone else to purchase your property. What other factors besides price should you consider when selling your house?

Preparing for Offers: The Basics You Need to Know

The first time you receive an offer, you want to set yourself up for negotiations beforehand. This process involves figuring out your exact needs first and understanding the Purchase Agreement.

Getting all these details set in stone early on matters because most buyer offers have an expiration date, before which you must either accept, reject, or negotiate.

Learning the Key Points of the Purchase Agreement

Sometimes known as the Purchase Contract, this document signifies the terms and conditions of the deal whenever a buyer makes a formal offer on a property. It can include details like:

• Purchase price
• Money deposit
• Property address
• Financing terms
• Inspections
• Closing costs
• Appliances

Since real estate can be a complicated market, picking up on the contingencies laid out in the Purchase Agreement goes a long way to grasping the details of an offer.

Figuring Out Your Own Needs

Take some time to decide what aspects of the sale matter the most to you. Are you trying to get the most money you can out of a sale and thus want to maximize price? Or are you more interested in selling within a timeframe?

You can’t make a proper decision on whether to accept or reject an offer if you don’t know what exactly you’re trying to accomplish with this sale. Take some time to consider your needs before proceeding.

Top Factors to Consider When Assessing an Offer

Once you’ve figured out the legal paperwork and your own needs regarding the sale, the next step is waiting for offers and evaluating them based on the major deciding factors: buyer qualification, timeframe, and price.

It can be tempting to focus on the price exclusively. After all, isn’t the money what you’re in this process for? However, you certainly do want to look at the other factors listed below as well.

Buyer Qualification

It’s worth looking at the terms and conditions of each offer and the financial stability of the associated buyer. These factors change how smooth the deal goes. Some questions to ask are:

• Is the deal in cash? An offer paid entirely in cash typically pays less than other offers, but it’s the option of lowest risk and easiest closing. You won’t have to hassle with a third-party financing solution in this case.
• If not, what’s the down payment? You’re familiar with down payments if you’ve worked with mortgages before. In most cases, the buyer finances a large portion of the purchasing price from a lender, with the remaining amount paid directly by the buyer known as the down payment. The larger this figure is, the more financially stable the buyer likely is. You ideally want a down payment of at least 20% of the total purchasing price.
• Is the buyer pre-approved? That is, has the lender officially looked at the buyer’s income, credit, and other metrics and decided that the buyer is ready to make the purchase? A pre-approval doesn’t necessarily guarantee financing, but it is a positive sign for you, the seller.
• What about the earnest money deposit? Separate from the down payment is this money deposit, which is basically the amount the buyer pays the seller to show an intention to dedicate to the sale. Since this amount is non-refundable should the buyer back out of the deal, a higher earnest money deposit shows that the buyer is serious about purchasing your property.

Buyers, of course, can add their own contingencies to the contract. These conditions must be met before the sale goes through, and they can include:

• Whether the buyer can sell his own home first
• Whether a property inspection finds an issue
• Whether a mortgage can be secured first

You generally can think of contracts with more contingencies as riskier since there are more possible ways for the buyer to back out.

Timeframe

In terms of timeframe, a real estate transaction revolves around the closing date proposed by the buyer. At this point, the buyer officially possesses the property, and you will have to move out. Should you need to stick around for a little while longer, think about finding alternative solutions like hotels or short-term rentals.

Closing dates can vary depending on your preferences. Some property owners want to close as soon as possible, while others have external circumstances that call for a specific range of dates. For instance, you might be moving for work or school soon and need to plan your real estate activities around those dates. Or you’re still waiting on a closing date for a home you’re buying yourself.

Always negotiate with your buyer to see whether any flexibility is available regarding the closing date. If the dates don’t line up, one option you can take is a leaseback, where the buyer allows you to lease the property as part of the negotiations. Even after finalizing the sale, you have an opportunity to delay your moving.

Price

Price, while fairly self-explanatory, is a lot more complicated than it may seem on the contract. There are several ways a price can be misleading in terms of the amount you ultimately receive as a seller.

• Who pays the closing costs? It’s up to both parties who pays what portion of the closing costs, which can range from agent commissions to home warranty fees, insurance, HOA transfers, and others.
• What about a home warranty? Some buyers might request a warranty that covers repairs and replacements of home appliances and systems if they ever break. Look out for such an agreement in your purchasing contract.
• And what if a survey is necessary? Lenders and insurance companies may request a survey to be done prior, which sets out the legal descriptions and boundaries of the property. It’s up to the contract regarding who gets to pay for the service.

Price shouldn’t be the only factor you consider when selling your property, but it certainly plays a huge role in your negotiations.

Selling Your Home is Easy and Seamless with Joel Cooper

Selling a house is a decision you make at a turning point in your life. Getting the job done right requires a close inspection of your needs and offers, as well as strong negotiations regarding the terms and conditions of sale.

The factors you look at include the timeframe of purchase, the price, and the qualifications and financial stability of the buyers making the offers.

Sounds complicated? Contact Joel Cooper, one of the Toronto area’s most qualified and experienced real estate agents, to make your seller experience a seamless one.