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So you got an offer now what do you do?  Our goal is to get you the most money possible.  The most any buyer is willing to pay.  So let's talk about some scenarios and what to do.  Then we will talk about parts of the offer. What you do depends on where you are in the process.  Is it the first day on the market, first week, or have you been on the market for months and this is your first offer.   You may have multiple offers.  Maybe you have gotten two, three, or four offers all around the same price and now you have another one.   Below are just some general observations on what to do and how to negotiate.

First offer in months

I am going to talk about your home being on the market for months and this is your first offer.  If this is your first offer after months then you need to try to work it out and get it signed.  There is one or more reasons why your home is not selling.  It may be way over priced, in below average condition, it may have a bad layout, or the location of the home may be bad (may have a cell tower, business, busy road, or electric lines nearby).  If you have a fish on the line you need to real them in and get the deal closed.  Do what you have to get your home sold.  Your home is going to get low ball offers when it has sat on the market for months.  It will get worse not better the longer it sits.  You are not sitting in the best bargaining position if you are not getting an offer.  Now is not the time to turn up your nose at any offer.  So look at the offer and try to negotiate it out.

Two, three, or four offers all around the same price

Now you have another offer still around the same price and all the offers have come from different buyers.  It's time to wake up and realize that your home is probably only worth about the price of the offers you have gotten.  It's not magic that everybody is offering you the same price.  Sure you may be asking a lot more, but the market is telling you that your home is worth this much.  If you really want to sell then you should try to negotiate a little higher price, and close the deal.  Again after a long time on the market you are going to start getting low ball lower offers.  It's in your best interest to negotiate.

First day or first week

Well what do you do when it is a hot market and you get an offer in the first day or first week?  The key is how many other showings do you have or are requested?  You sometimes want to slow the process down and take a day to respond to the offer.  You may get another offer in during your thinking period.  At this point your agent should be emailing and calling everybody that has seen the house and let them know you have an offer.  Your agent should be telling the other agents that if their buyer is interested in the home they need to get an offer in by a certain dead line.  What you do not want to do is say you are going to wait a week to respond.  The buyer may walk. Keep the buyer in hand and try to slow down the answer.  But you can't wait three days.

When it comes to selling a house, there are two old adages:

  1. That the first offer is the best offer.  I have seen many sellers regret that the just turned the first offer down.  Especially when the home sits for months afterward.  I would try to negotiate to get what you want.
  2. A bird in the hand is worth more than 10 in the bush.  An offer in hand is better than the 20 possible buyers that may come through your home.

If you have a chance to get multiple offers and still be able to decide before the buyers offer expiration date then explore the possibilities of a better offer.  If is a great offer do not be greedy, it may be wise to accept it and run.  Especially if all the terms are good.  If it is just an OK offer it doesn’t mean there isn’t room to negotiate. You should seriously always, always consider the first offer you receive, even if it’s a little lower than you hoped.  Sometimes when sellers turn down the first offer and then the house sits it hurts you.  You may never get a full priced offer.  Remember, every day that your home remains on the market, it loses a little bit of its newness. If you reject your first offer you could find yourself hoping to get the first buyer back when no one else has stepped up.

Multiple offers

These sometimes are the best situation you can hope for. A bidding war on your home? That’s the dream of any seller.  Now it gets down to terms.  It can be confusing and stressful to have a multiple offer situation.  Have your realtor layout all the options and then explain which one offer they think is the best.  Ask questions.  There is no one best rule to chose as you may have several terms that you need.

  1. Amount offered - Sure getting the most money possible is the best scenario, but sometimes a little lower cash offer may be a smart choice.  Or you may need to stay in the house longer and the buyer that is offering that has a little lower price offer.
  2. Occupancy - Does when the buyer want to get in, fit in with your moving schedule.....most times the buyer is flexible
  3. Earnest money - The more down the better for you.  It means the buyer is serious.  However it is rare that you get the earnest money if the deal falls apart.  It usually means a court date to keep it.
  4. Home Warranty - Not a huge deal.  Does the buyer want one or not?  It could be an extra $400 to $500 cost for you.  If you are looking for the cash it may be a big deal.  You can say no now and maybe have to give it if there are inspection issues. 
  5. Sellers concessions or sellers closing costs - Is the buyer asking for you to pay some of them.  If the buyer is asking you to pay for some of their closing costs it usually means they need it.  You have to remember....whatever the amount of the concessions are is a negative to you.  So in reality a $200,000 offer with $5000 in sellers concessions means your net is $195,000.  In a multiple offer situation it may be smart to stay away from the offer with sellers concessions.  Simply because if the house doesn't appraise you may get less than what somebody else offered. 
  6. Contingencies - You have a inspection contingency in every purchase agreement that allows the buyer to back out if they do not like the inspection results.  If somebody waives the inspection that is a plus in your book.  It is the same way with the appraisal.  If the buyer is willing to buy the house even if the appraisal comes in low that is great.  Another variance of that is the buyer agreeing to pay a certain amount over the appraisal price. That makes that offer a little sweeter than a buyer that won't or can't pay more than appraised value.  The one contingency you should not accept in a multiple offer situation is where the sale is contingent upon the buyer selling their home.  Why do that when you have buyers that do not have that contingency and are ready to close.
  7. Type of Mortgage or cash - If all other terms and conditions are the same on an offer here is how your rank the best type of mortgage or cash.
  • Cash is king because there is usually no appraisal.  It closes quicker, and there is no mortgage.  No way a mortgage underwriter can kill the deal or the appraisal to come in low.  
  • Conventional mortgage - best type of mortgage because it usually means buyer is a saver or has better credit than a FHA or VA buyer.  Of course the bigger the amount down on a mortgage is better.  For example 20% down mortgage is better than one with 5% down.
  • FHA mortgage - A buyer that has FHA may have had bruised credit, or may be a first time home buyer.  Not as safe as a conventional mortgage.
  • VA mortgage - these are our servicemen or servicewomen.  They are looking to buy with no money down which isn't bad.  They could have great credit.  Why a VA loan is towards the bottom of the list is because of the VA home inspection/appraisal.  If your home has issues then you may have to do repairs with a VA Loan.  Where you would not with a conventional loan.
  • Rural Development, Grant Loans, and special programs.  Uncertainty is the key here.  We don't know much about the programs and sometimes they are tough to qualify for.  Sometimes the buyers get denied.  That would be my last choice of the different mortgage types.

 I am going to talk about home selling contingency a little more.  It says the buyer will purchase your home if and when they sell their existing home. Sometimes, in slow markets or when you have not gotten an offer, you may end up accepting this contingency.  The key is this is to put in the contract that you can still market your home and if you get another offer the first buyer has to move forward or cancel the first purchase agreement.  Usually you give the first buyer 24 hours to make this decision, so you do not lose the second buyer.  You also want to put a end date on how long the contingency is for.  You do not want to be waiting 6 months for the buyer to sell their home.  

The key in any offer is negotiation. Most buyers do not expect you to accept their offer unless it is excellent at or above list price. It is OK to make a counteroffer on other offers. Just do not be greedy. There is a huge benefit to keeping the offer alive. When you are negotiating you are still showing the house and you may get another offer.

Remember it is not always just about the sales price. Are the buyers asking for you to pay closing costs? Are they willing to skip the home inspection? Are they prepared to give you the extra time after closing to take move out?  Each of these items may value to you.

This should have given you a few ideas on how to negotiate and which offers are the best and why.

Picking the right offer can be confusing.  Even after reading this article understanding what is the right offer to pick may be tough.  Feel free to reach out and call me anytime.

 

 

 

 

 

one that says the buyer will purchase your home if and when they sell their existing home. Sometimes, in slow markets, you may end up accepting this contingency, but make sure it ends within a reasonable period of time, such as 30 days.

 

P.S. We love your house!

It’s common for buyers to write you a heartfelt letter about why they want to buy your home. And chances are, you feel pretty emotional about it. If all the other conditions of the offer work for you — price, financial ability to close the deal, timing and contingencies — go ahead and let them tug on your heartstrings. You want to feel good about selling your home.

two, three, or four offers all around the same price