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For most homeowners selling their home the thought of negotiating an incoming offer is a matter of settling in on a price that both sides can agree upon. But did you know that there is another key aspect of negotiations aside from price that could have even greater impact on the sale? The terms of your contract hold equal weight and importance as price in the sale of your home and are critical to a successful sale.
Here are five essential things to consider when navigating through the negotiation process after an offer comes in on your home.
After the housing market crashed in 2007 lenders, buyers and sellers have proceeded very cautiously. Lenders are staunchly following stringent requirements, buyers and sellers are savvier than ever before and what seemed like formalities in the process before are now becoming necessities. Preapprovals are one of the things that did not always need to be done in advance of buyers finding a home. But as you receive your offer on your property, be sure that your buyer has a preapproval from a reputable lender. The letter should indicate what the buyer can afford and how much the lender is willing to loan them, assuming they meet all requirements at the time of application.
One of the requirements lenders have today is to have an appraisal done on the home to equate its value with the selling price. Unless the buyer has a significant down payment available, a less than ideal appraisal can stand to affect the sale altogether, even causing the deal to break down. Check to see how much your buyer is able to put down on the house and add up the down payment with the loan amount to see if they equal your asking price.
Does the buyer have an existing home they need to sell? This can be a problem for you as a seller if they want to include a contingency in the contract that absolves them from the commitment of buying your home if their home does not sell. This can wreak havoc on the sale of your property, as it would require you to leave the terms of your sale up to the success of another sale. It would be best to avoid offers that include existing home contingencies.
When does the buyer want to close on the home? If the requested closing date extends beyond 90 to 120 days then it might be time to reconsider the offer. Lenders have timing guidelines that dictate a 45-day policy, within which buyers must apply for a loan before closing. Anything longer than that would get in the way of the lenders’ policy leaving the seller hanging in limbo during those off weeks. When a buyer cannot meet the contractual obligation to get a commitment within 45 days, it might be a good idea to forego the offer altogether rather than to risk the sale.
Some buyers offer cash rather than opt for financing and though it is an attractive offer at first, you need to make sure that the buyer has the cash. Asking your Realtor to verify the availability of those funds will become a necessary additional step before you can move on in the offer. In some cases, buyers opt for alternative financing and when the time comes to verify the funds they are unable to do so. The risk is too great so unless you can be sure the cash is there, it is a better idea to move on to the next offer.
Navigating through offers is a tricky process – especially in today’s market. It is no longer just a matter of coming to agreement on a sale price, rather both parties must agree to all aspects of the terms. For customized guidance on your real estate endeavors, contact us today!