You have placed your property on the market and an offer or even multiple offers have been received, but how do you know if the offer is good for you? Your broker is obviously there to assist you and offer you guidance, but the ultimate decision belongs to the property owner. You always want to achieve the highest price for your property, but believe it or not, the choice may not always come down to price.
Take a look at the amount of earnest money a buyer is offering to deposit. Earnest money is the amount the potential buyer is willing to give up front at the time of contract execution to show they are serious about purchasing your property. These funds are usually held in an escrow account by the title company, attorney or real estate office. These funds may also be lost by the buyer and given to the seller if the buyer does not close on the property outside of any contingencies they may have placed in the contract.
Contingencies are provisions in the contract that must be met in order for the transaction to go through. If for some reason a contingency is not met, then the contract can be declared null and void and the buyer is entitled to a full refund of their earnest money. The fewer number of contingencies in a contract, the more likely it will end up at the closing table. The most common contingency would be the mortgage contingency. In a few words, if the buyer is not approved for their mortgage, then they cannot purchase the home and they will be released. Another is the home sale contingency, which allows the buyer to sell a property they currently own, then take those funds and purchase yours. Others include home inspection, title, and appraisal contingencies just to name a few.
An all cash-offer can be tricky at times as well. Be sure to obtain “Proof of Funds” with the contract, which basically shows the buyer having the funds ready and available to close. A bank statement or letter from their personal banker is usually what is asked for.
Lastly, take a good look at the closing date the buyers wants. On a typical financing deal, you may be looking at anywhere from 30 to 60 days, even though there are lenders that claim they can do it in less than 30 days. On a cash deal, the buyer may want to close as soon as a week. Does that work for you? Will you be able to fully vacate the property and in many instance deliver to the buyer in broom clean condition? Whether you want to close quickly or slow down the process, that could be taken as a counter offer by the potential buyers.
Deciding on accepting, rejecting or counter offering to a potential buyer is something that should be looked at closely. You and your real estate professional should always sit down together and review the offer packet line by line so you know exactly what you are agreeing to. All contracts should have an attorney review period in which you, along with the buyers, can have the contract reviewed once it is signed by all parties. That attorney review period allows you to be released from the contract for numerous reasons. Many times, the only section the attorney will not be able to change is the purchase price. Everything else is up for grabs!