If you are in the enviable position of being in a seller's market when selling your home, you will face a unique and welcome challenge. In the fortunate event that you have multiple offers, there are many considerations you should make before selecting the offer that is best for you.
It seems obvious that you should pick the highest offer or maybe even the first offer, but it is in your best interest to look beyond just the amount the buyer is willing to pay. Though being in a seller's market and receiving multiple offers nearly always guarantees achieving the terms and conditions that are part of your real estate goals, the offer that appears to be the best may not be. There are several things to look at to be sure you understand how to select the best offer before settling on one.
Net proceeds are the amount of money you will receive at the close of the contract on your home. Several things can negatively affect your net proceeds, be sure that you understand the terminology and the fine print in the agreement.
A buyer's lending Institution may have unforeseen impact on your net proceeds. people that are borrowing money from a lender to buy their home will need to get a bank appraisal before the lender will give them the money. This appraisal can turn up needed repairs before the transaction can be finalized. These repairs come out of the seller’s pocket. Be aware that there will be an appraisal and know if there are contingencies based on the type of loan the buyer is pre-approved for.
The home inspection can often bring about a second round of negotiations when selling your home. Previously undisclosed issues may be discovered during the inspection and it is typical that the buyer will ask for a reduction in price or for the seller to do the repairs before closing.
Buyers will sometimes request that a seller make concessions to cover down payment and closing costs. Concessions usually come in the form of a dollar amount off the selling price. If it is a fixed dollar amount, you will be clear of its impact on the net proceeds. If a buyer waives a home inspection this means they will accept the home in as-is condition for the price in the offer this is another consideration when considering multiple offers.
Knowing the difference between prequalified and pre-approved buyers is another important consideration when selecting the right offer. A pre-qualified buyer is not guaranteed a loan, this simply means they passed an initial screening, but may be denied a loan when they actually apply for it. A pre-approved buyer has gone through a deeper vetting process and though pre-approval is not guaranteed, this buyer is much more likely to get the loan. It is a good idea to insist on a pre-approval letter from the lender with any offers that are extended.
Various types of mortgages have different requirements for the home being purchased if the buyer is using an FHA or VA mortgage. If your home does not meet the requirements, last minute changes would need to be made to successfully close the sale. Knowing about the different mortgages and the requirements is a good idea so that you can make an informed decision about the offers being made, and the likelihood of an expedient and successful closing.
Earnest money is usually 5% of the selling price and is held in an escrow account by the listing agent until closing. This is to demonstrate that the buyer will likely not walk away from the deal and will honor the conditions of the contract. If the buyer does not meet the conditions or walks away this money then belongs to the seller. The amount put down in earnest money is an obvious consideration when trying to select the right offer.
Sometimes one of the largest considerations on an offer is the ability to close within a specific amount of time. Closing dates are often critical when you were buying and selling a house at the same time. Meeting a relocation deadline and avoiding unwanted contingencies such as renting temporarily or having to keep things in storage can be a motivation for many sellers to consider an offer that is a little less because it can meet desired closing date. Your timetable is another important factor in selecting your best offer.
Knowing the mortgage commitment date serves the purpose of knowing when the buyer will receive the money from the lender to buy the home. Sometimes pre-approved buyers could have a loan fall through, and for this reason a formal mortgage commitment date is important. Once this date is made the likelihood of a successful loan is much higher. This commitment date helps you know if the closing of the sale will work for your schedule.
Carefully look over the contingencies of the offer, because though the amount may be satisfactory, home contingencies can cut so far into the net proceeds that you may have been better off accepting a lower offer that does not have as many requirements. Being aware of the typical contingencies and knowing what you are willing to do to close on the sale of your home will help you determine if you wish to accept an offer that contains them.
A general inspection is to be expected but can also create new negotiations
A radon inspection that shows levels that fall above the EPA guidelines is generally expected to be remediated by the seller before closing the sale. Remediation costs between $1000 and $2,000.
Radon in water is not often checked by home buyers. This is an error because it is much more difficult to remediate radon from water than it is from air and the cost is usually between $5000 and $6000 dollars.
Buyers will often test for the presence of mold in the home because it is a serious health concern, few buyers will close a sale without the mold being removed from the home.
One of the best ways to avoid having these contingencies create a negative impact on your real estate goals is to get a home inspection before putting the house on the market. This keeps both the buyer and the seller from encountering hurdles that can delay the close of the sale or cause the deal to fall apart.
Being aware of any challenges you face when selling your home, understanding the mortgage contingencies that a potential buyer must adhere to, and recognizing that the highest offer may not be the best offer for you will help you walk away with the largest amount of net proceeds and is likely to create a smoother real estate transaction.
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