What Home Sellers Should Consider When Reviewing an Offer

Selling a home can be nerve-wracking. One of the more stressful parts is waiting for an offer to come in. But even when you receive one, make sure you review it well before accepting. Here are a few of the things you need to look at before deciding whether or not to accept it.

What Home Sellers Should Consider When Reviewing an Offer

Offer Price

Everyone likes a deal. And our Inland Empire real estate market appears to be more balanced between buyer and seller. So, do not be discouraged if you see a lower-than-asking offer…especially if you priced it right to begin with. You can always counter back. What if they come in at asking? Well, meeting your asking price is great. However, there are other factors to think about as well.

Contingencies

The fewer contingencies, the better. It makes the whole process run a bit smoother with fewer conditions put into place. Some common contingencies buyers ask for include financing, selling their current home first, making sure the home appraises high enough, and a home inspection. If the buyer pays cash, they may waive the financing, appraisal, and home sale contingencies. Just make sure that they have enough funds in their bank account to cover the entire purchase before accepting an all-cash offer. If a buyer needs loan approval, an offer with pre-approval or pre-underwriting is much more sound than an offer with just a pre-qualification letter attached.

Financing Method

Speaking of financing, look at how they plan on getting financed. All-cash offers appear great at first. After all, they shorten up your closing timeframe. And if you need to sell your home quickly, that is definitely ideal. However, (again) make sure they have proof of funds first. Also, all-cash buyers tend to have the upper hand with negotiations. So, they may offer below asking and want a few extra perks thrown in as well.

If your buyer needs to procure a loan, see what method of funding they used. Request that the buyer include a pre-approval letter (at the very least) with their offer. This demonstrates that they have talked to a lender and the lender found them solid enough financially to pre-approve the funding for the home in question. Nevertheless, “pre-approval” is not the same as “final approval”. Sometimes, sales fall out of escrow even when a buyer receives pre-approval.

Earnest Money Deposit

An earnest money deposit (also known as a “good-faith deposit”) is the money a buyer puts down at the start of escrow. In the past, $1000 was considered normal. However, nowadays, it typically runs about 1-2% of the sale price. For a $500,000 home, sellers may expect to see $5,000 to $10,000 for just the EMD. This money goes towards the mortgage loan once escrow closes. A higher earnest money deposit shows just how serious the buyer feels about purchasing the property. The more they deposit, the more they potentially may lose. If the sale falls through, the seller could possibly end up with the EMD. That usually serves as plenty of motivation for a serious buyer.

Closing Timeline

Finally, sellers should consider the closing timeline spelled out in an offer. Have you already bought another home and want to be out of your financial obligation to your current home? A shorter timeline works better for you. But what if you need a bit more time to pack up years of memories and find a new place to live? Look for a longer timeline.

Always discuss any offer you receive with your Inland Empire REALTOR® before making a final decision. They know the local market. So, they have the kind of insight you need to make the most informed choice.

Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty