Perhaps the most complex moment in the sales process comes when you get an offer for your home. Whether you have one offer or several to consider, these tips will help you navigate the negotiation.
Home sellers who have chosen the right broker, prepared their home for sale and priced it right should be in a good position for a smooth real estate transaction, but perhaps the most complex moment in the sales process comes when you get an offer for your home.
Ideally, the potential buyer or buyers have offered you full price or more, along with great terms for the sale. However, the reality is that not every offer will be immediately acceptable. You’ll need to carefully evaluate each offer and begin a negotiation with the buyers through their broker.
Your Seattle Area Real Estate Team Broker will be your advocate and educate you on the terms of the offer and help you understand the offer in the context of the housing market. You will need to take into account whether you’re in a balanced market with equal numbers of buyers and sellers or one in which buyers or sellers have the upper hand. You’ll also need to determine whether home prices are rising or falling in your area.
Before you consider accepting any purchase offer, the most important step is to determine whether the buyer can fulfill the terms of the contract with financing. Your Seattle Area Real Estate Team broker will check on the pre-approval letter that should be included with any offer by communicating with the buyer’s broker and the buyer’s lender who provided the pre-approval letter.
What Factors Should You Consider in a Purchase Offer?
Once you know the buyer can legitimately qualify for a loan, you should begin to evaluate the offer by looking at these factors:
• How close is the offer to your asking price?
• Does your broker feel confident the home will appraise for the contract price?
• How large is the earnest money deposit that is part of the offer?
• Has the buyer asked for assistance with paying closing costs?
• Has the buyer asked you to make repairs or to give a credit for home improvements?
• Is the requested settlement date appropriate for your needs?
• What contingencies are there written in to the contract?
• Of those contingencies (financing, inspection) what elements of concern do they give your broker?
• Are there any other pertinent details about the offer or buyer that your broker has made you aware of?
If you’re not immediately satisfied with the offer or are uncertain about whether to accept it, consider your options and review these questions with your broker:
• Are there other offers?
• Can you wait for more offers to come in?
• How will you handle it if no other offers come in after a particular deadline?
• If you were to not receive other offers for a month or two would this offer be acceptable terms?
Making a Counteroffer
As a seller, you have the options of accepting the offer as is, declining the offer, or making a counteroffer. Your Seattle Area Real Estate Team Broker will give you advice about your negotiating stance based on your home in relation to the current market, but generally you should be prepared to compromise on some aspects of your home sale in order to make a transaction come together.
Your negotiations can go easier 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. Your Seattle Area Real Estate Team Broker should have prepared a document showing you net proceeds at different sales prices that can make it easier to understand the real value of different offer prices.
Negotiations proceed best when both you and the buyer respect each other’s needs and interests and come to an appropriate compromise with the help of the brokers involved.
Over the past several years the Seattle real estate market was red hot and one element that became a regular element of transactions was a “pre-inspection”. This is when a buyer requests from the seller the opportunity to have an inspection done on the property before making an offer. The benefit of this to the seller is that the buyer would then make an offer that is not contingent upon an inspection if they are satisfied with the details in the inspection. The buyer may also learn from the inspection things about the home that affect the terms of their offer such as the price or elements that they ask to be repaired or addressed in the initial offer. In a “sellers market” the way for some buyers to make a more attractive offer was to do a pre-inspection although as the market is transitioning back to a balanced market the frequency of pre-inspections is decreasing.
A seller may also choose to do an inspection before listing their home on the market. This pre-inspection allows the seller to learn about any and all of the concerns that their home may have that could come up during a buyers inspection. The seller can then choose to address these concerns before listing in order to have their property as prepared as possible for a buyers review. There is however a negative to the seller doing a pre-inspection and that is that the seller would need to disclose any defects that they learn about their property in the seller disclosure statement that is provided to a buyer. If the seller has not yet repaired those defects they could be presenting the buyer with information and details that they could view negatively before making their offer or during the negotiation process. We at the Seattle Real Estate Team evaluate each sellers situation individually and provide our recommendation based upon our review of these options with you.
Once a buyer has decided to make an offer on your home, it will usually be contingent upon an inspection of the property and its improvements. The home inspector looks beyond cosmetics to make sure that the home's systems operate properly. The inspector will also look for repairs that are needed and report on the condition of the home. The inspectors goal is to provide the buyer with all the information they need to know about the property, the way it functions and any and all concerns about it. A home inspection also points out the positive aspects of a home, as well as the maintenance that will be necessary to keep it in good shape.
The standard home inspector's report will review the conditions of the home's heating and cooling systems; interior plumbing and electrical systems; the roof, attic and visible insulation; walls, ceilings, floors, windows and doors; foundation, basement and visible structure. The inspector will also look for cracks in cement walls, water stains that indicate leakage and any indication of wood rot. Many home inspectors are also licensed to evaluate and inspect for pests such as rodents or insects and will incorporate that review into their report.
Your Seattle Area Real Estate Team Broker is familiar with many home-inspection services and can provide you with a list of names from which to choose if you so desire. Remember, no home is perfect. If problems are found, your Seattle Area Real Estate Team broker will help you navigate through the process.