Home sellers who have chosen the right REALTOR® prepared their home for sale and priced it right are strongly positioned 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.
Your REALTOR® should be your partner and educate you on the terms of the offer and help you understand the offer in the context of the housing market in your area. You will need to know 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 estimate whether home prices are rising or falling in your community.
Before you begin to analyze any purchase offer, the most important step is to determine whether the buyer can fulfill the terms of the contract with financing. Your REALTOR® can check on the pre-approval letter that should be included with any offer by consulting with the buyer’s agent and the buyer’s lender.
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?
- Will your home appraise for the contract price?
- How large is the earnest money deposit that accompanied the offer?
- Has the buyer asked for assistance with 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?
If you’re not immediately satisfied with the offer or are uncertain about whether to accept it, consider your options:
- 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?
As a seller, you have the options of accepting the offer as is, declining the offer, or making acounteroffer. Your REALTOR® can give you specific advice about your negotiating stance based on your home and your market, but generally you will need to be prepared to compromise on some aspect of your home sale.
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. Your REALTOR® should have prepared a document showing you net proceeds at different sales prices that can make it easier to understand the value of different offers.
Negotiations proceed best when both you and your buyer respect each other’s needs and interests and come to an appropriate compromise with the help of your REALTOR®s. Then, move on to Step 6.