The offer came in. It’s higher than the last “buyer’s” initial offer, which is a good sign. Hoping we can negotiate to a place where we get it under contract.
Thought this would be a good time to talk about the various issues to consider when selling a property. Price is the most obvious element of concern in a contract as it is the amount the buyer is offering to pay for your property. But you can’t stop there. There are other elements that need to be considered. Here are the major ones:
– Concessions: the amount the buyer is asking you to pay for at closing, usually to cover their closing costs or to put money in escrow for repairs. The concession amount reduces the price you are getting for your property.
– Money down: the earnest money plus cash at closing equals the amount of money the buyer has to put down to purchase the property. The balance will be financed. The higher the cash, the better. Aside from inspection issues, most deals fall apart because the buyer fails to qualify for the loan they are trying to get. So, the higher the percentage of money down, the less chance there is of the financing falling through.
– Type of loan: cash is king, of course. A lower cash offer may be better than a higher financed offer. Cash closes quicker. Cash doesn’t require a buyer to go through the mortgage hoops of fire. Cash doesn’t require an appraisal, which can be huge. Just because you want $500K for your house and someone is willing to pay $500K, it doesn’t mean you can actually get $500K. It has to appraise for that (and appraisals can be murder) – unless your buyer has cash, in which case they can pay you more than the house is worth and no one will bat an eye. However, if financing is part of the picture, know that a conventional loan has fewer hoops to jump through than an FHA loan. And make sure your buyer is pre-approved for a loan. The pre-approval letter should accompany their offer. Keep in mind, though, that it is NOT a guarantee of financing.
– Contingency: does the buyer have to sell a property in order to buy yours? Hopefully not. If they do, then you are at the mercy of them being able to close on the sale of their property, which means you are at the mercy of their buyers. Find out as much as you can about the solidity of their deal before committing.
Time to counter the offer that came in.