What you need to know before accepting or rejecting an offer

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The day will come – and it will be a wonderful, joyous and joyous day of dancing – when you will receive one or more offers for your home.

And that day you will be faced with a question that you may not have thought of before: how do you know if an offer is the best for you?

Your listing agent will be of great help here. They will understand and help you assess the merits and flaws of an offer because, believe it or not, it’s not always about the price.

A buyer’s beautifully high offer may not look so good anymore, for example, if you find out that it depends on you leaving a month earlier than expected. Or, conversely, you might prefer speed over price, especially if you are moving to a new city.

Your listing agent will have an idea of ​​what you want financially and personally – and can help you determine if the offer at hand meets those goals.

Before the first offer arrives, here’s what you need to know about the offer evaluation process, including the main factors that should go into making the decision: accept or reject? – with your agent.

5 important things – other than price – to consider when evaluating an offer

Want to grab the best price for your home and walk away with as much money in your pocket as possible? Of course you do. You’ve gone through the tedious process of setting your asking price, organizing your home, promoting your listing, and planning open houses – and you should be rewarded for your efforts.

Your first instinct may be to simply pick the highest bid on the table. But the price of the offer is not the only thing to consider.

When checking out offers, rate these five areas in addition to price:

1. The deposit deposit. An important consideration when evaluating an offer is the size of the down payment. EMD is the amount of money that the buyer offers to spend when the sales contract is signed to show that the person is serious (ie “serious”) about purchasing your House. This money, which is usually held by a securities company, will be used as the buyer’s down payment at closing.

A standard EMD is 1% to 3% of the cost of the house (so that would be $ 2,000 to $ 6,000 on a $ 200,000 house). If a buyer tries to withdraw from an offer for no good reason, the seller usually keeps the EMD. Therefore, the higher the deposit, the higher the offer.

2. The contingencies. Most offers have contingencies – provisions that must be met for the deal to go through, or the buyer has the right to opt out of the deal with their deposit. Contracts with fewer contingencies are more likely to reach close and in a timely manner.

Here are five of the most common contingencies:

  • Home inspection contingency. This gives the buyer the right to have the home professionally inspected and request repairs by a certain date, usually within five to seven days of signing the purchase contract. Depending on where you live, you may need to do home repairs for structural defects, building code violations, or safety concerns. However, most repair requests are negotiable, so you have the flexibility to haggle over the fixes you’re willing to make.
  • Assessment contingency. In order for a mortgage lender to approve a home buyer’s loan, the home must pass appraisal – a process in which the property’s value is appraised by a neutral third party. The appraisal verifies that the house is worth at least enough money to cover the cost of the mortgage. (In the event that the buyer cannot make their mortgage payments, the lender can foreclose on the house and sell the property to recover all or at least part of its costs.) As a general rule, the buyer is responsible for the payment of the appraisal, which usually takes place within 14 days of signing the sales contract.
  • Funding for contingencies. Also known as a loan contingency or mortgage contingency, a financing contingency protects the buyer in the event their lender does not approve their mortgage. While the timing of financing contingencies may vary, mortgage lenders report that buyers typically have about 21 days to get their mortgage approved.
  • Sale of current house provident fund. Depending on the buyer’s financial situation, his offer may be conditional on the sale of his house. Usually, buyers have a 30 to 90 day window to sell their home before the sales agreement is canceled. This eventuality puts you as a seller at a disadvantage because you cannot control whether the buyer sells their house on time.
  • Contingency title. Before approving a mortgage, a lender will require the borrower to “release title” – a process in which the buyer’s title company reviews any potential easements or agreements that are known to the public. This ensures that the buyer becomes the rightful owner of the property and the lender is protected against property claims on liens, fraudulent claims from previous owners, clerical issues in courthouse documents or signatures. falsified.

These contingencies are standard for most real estate sales contracts. There is one exception: the sale of a current provident house, which tends to be used more often in strong buyer’s markets, when buyers have more power over sellers.

That being said, contingencies are still negotiable. (The caveat: Mortgage lenders require borrowers to have appraisal financing contingencies, otherwise they won’t approve the loan.) It’s up to you to decide what you’re comfortable with. accept, and your agent can help you make that decision.

3. The deposit. Depending on the type of mortgage, the buyer must make a down payment on the house – and the amount of that down payment can affect the strength of the offer. In most cases, the amount of a buyer’s down payment is tied to the home loan they take out. Your primary concern as a seller, of course, is for the deal to go through – and for that to happen, the buyer’s mortgage has been approved.

Usually, a larger down payment indicates the buyer’s financial means to close the sale. The average deposit, according to the NATIONAL ASSOCIATION OF REAL ESTATE AGENTS®, is 10%. Some mortgage products, such as FHA and VA loans, allow even lower down payments.

If by any chance the appraisal is higher than the selling price of your contract, the buyer with a higher down payment would be more likely to cover the difference with the large sum of money he has available.

4. The all-cash offer. The more money the buyer accumulates, the more likely the lender is to approve their loan. That’s why an all-cash offer is ideal for both parties. The buyer does not have to fulfill an appraisal contingency – where their lender has the home appraised to make sure the property is worth enough to cover the mortgage – or a financing contingency, which requires buyers get approval for the mortgage within a certain number of days. As always, having a sales contract with fewer contingencies means there are fewer ways to derail the deal.

5. The closing date. Settlement, or “close,” is the day both parties sign the final documents and formalize the sale. Typically, the entire process – from accepting an offer to closing – takes between 30 and 60 days.

Some transactions, such as those involving FHA, VA, and USDA government guaranteed loans, take longer than 60 days due to additional paperwork from the buyer.

Three days before closing, the buyer receives a closing statement from the lender, which he compares with the loan estimate he received when applying for the loan. If there are material differences between the buyer’s loan estimate and the closing disclosure, the closing cannot take place until these amounts have been reviewed and approved. But it’s rare.

Whether you want a slow or fast settlement will depend on your situation. If you’ve already bought your next home, for example, you probably want to close as soon as possible. On the flip side, you might want a longer closing period – say 60 days – if you need the proceeds from the sale to purchase your new home.

When to make a counter-offer?

Depending on the circumstances, you may be able to make a counter offer. But every transaction is different, depending on the particular market conditions and your home. In some circumstances, you can be bold with your counter-offer. In others, it might serve your goals better to give in to the buyer’s demands. Your agent can provide you with useful information on when and why a counter offer will be right for you.

For example: if you are in a sellers market, which means houses are selling quickly and at a higher price than asking, and you have received multiple offers, your agent may recommend a counter-offer of one. greater amount than you would have in a buyer’s market. .

If you choose to write a counter offer, your agent will negotiate on your behalf to make sure you get the best deal for you.

One caveat: In many states, sellers cannot legally counter-offer more than one buyer at the same time, because they are required to sign a purchase contract if a buyer accepts the new offer.

When does an offer become a contract?

In short, an agreement is contracted when the buyer’s offer (or the seller’s counter-offer) is accepted and signed by both parties. At this point, the countdown begins for the home buyer’s contingencies – and for the sweet time when the money – and the house – is yours.

* Content originally published by REALTOR.com, supplied by PAAR **


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