What happens when a buyer makes an offer?

Handshake One common first impulse is to ask “How much are they offering?” While price is an important factor, it’s also important to sit back and look at the big picture when negotiating a sale. Consider:

1. Buyer’s financial situation

  • Is the buyer qualified?
  • What is the buyer's annual income and employment history?
  • How much down payment and closing cost cash is available and what is the source?
  • What type of financial debt does the buyer have? Car loans? Credit cards?

2. Financing method

  • Is the loan type and interest rate realistic for current economic conditions?
  • Is the length of time requested to obtain a loan realistic? 30-45 days is a typical time frame. It allows enough time to process papers, but also allows you to put the home back on the market promptly if things fall through.

3. Your costs

  • How much does the buyer want you to contribute toward closing costs?
  • What will your net proceeds be? Add up any points, taxes or fix-up expenses requested and deduct them from the contract price to determine if your final profit is what you need to make your move.

4. Your calendar

  • Does the buyer's proposed settlement date give you enough time to select your next home and obtain financing?
  • If you can't move to your next home promptly at settlement, can you rent back from the buyer?

5. Contingencies

  • Must the buyer sell a home before buying yours? You may not have the time to wait while the buyer sells.
  • What add-ons does the buyer want? Curtains, lawn equipment, swing sets? All of this can affect your final net proceeds, be used as bargaining chips, or both

We are here to help. We’ve been through this countless times and can help you cut to the chase and come up with a mutually acceptable contract. A call or e-mail today can make a big difference in the future.

How do agents turn a “Tire-Kicker Wannabe” into a “Sign-Here Buyer?”

Home Sold Sign When the bid is presented to you, listen to the offer, even take notes – but don’t respond until the presentation is complete. You have three choices: (1) accept the contract as presented; (2) reject the contract; or (3) make a counteroffer. Most often, sellers choose the third alternative. The choice is yours, but we can advise you every step of the way.

Art Of The Counteroffer

    If you find some items in the proposal unacceptable, it’s time to negotiate. It’s also time to call on our experience and training, as you did when you first decided to list your home. This is when our professionalism really pays off. We will guide you through the contract maze of small print, explain what each item entails, and help you evaluate the bottom-line impact of price and terms in the bid as well as suggest possible responses.
  • Don't delay. Often time is of the essence. Avoid delays. Although you may want more time to think over the offer, be aware the buyer could withdraw the offer any time before you sign it. The best time to decide what terms and price and timetable you will – or will not – accept is while preparing your house for sale, so you can respond quickly when a contract is presented.
  • Consider seller-paid points. It's good to know before you begin negotiating that paying points for your buyer's loan is a powerful double sweetener. That's because seller-paid points save the buyer out-of-pocket cash, AND serve as a tax deduction for the buyer. As we work together, we will clue you into other important negotiating tool
  • Do it in writing. Make your counteroffer in writing on the original contract form, initialing changes you propose. Contract negotiations may go back-and-forth several times, with each party giving and getting something each time as you zero in on common ground. Don't negotiate by phone and, even if it looks messy, don't retype the contract as long as it's legible. Something could get left out or inadvertently changed.
  • Consider a contingency kick out. If the buyer offers a contingent contract, you could consider including a kick-out clause. The clause allows you to accept another offer after a stated time, such as 45 or 60 days, or requires the contingency be removed within 48 to 72 hours. Occasionally sellers require a higher sale price when accepting a contract contingent upon the buyer selling their present home. Often, a home inspection contingency is added by the buyer, so having an inspection before you list your home can prevent costly repair surprises after the contract is negotiated.
  • Rely on your agent. We can recheck comparable sales, compare offers if you receive more than one bid, and compute how much you will net from the sale. We can also help you focus on the buyer's creditworthiness and whether the buyer can afford to buy your house.

Remember, everyone has the same goal: you want to sell, the buyer wants to buy, and we want to help close the transaction. Together, we’ll turn your counteroffers into an art. Call or e-mail us right away.

Is negotiating with out-of-town buyers any different?

Phone Just because out-of-town buyers may have to rush is no reason for you to hurry. There’s still time to negotiate after they’ve gone home. Out-of-town buyers are often serious, sophisticated buyers who have purchased at least one home before. That means they may not capitulate to all the seller’s demands just to finalize the contract, and may even bid low the first time around.

Some hints in dealing with an out-of-town buyer:

  • Learn all you can about the prospective buyer through your agent.
  • Carefully consider each offer you are given, take it apart and look at the price and the terms one at a time, and make a decision based on the two combined.
  • Be as flexible as you can when it comes to closing and move-in dates.

Who pays the fee of a buyer’s agent?

Thumbs Up The offer looks good. You’re ready to accept it, but the buyer is using a buyer’s agent (also called a buyer’s broker) and wants you to pay the agent’s fee.

  • What does a "buyer's agent" do? A "buyer's agent" is retained by a buyer to look out for the buyer's interests and to negotiate the best price from their point of view. As the agent who lists your house owes you complete loyalty, the "buyer's agent" owes the buyer the same degree of loyalty.
  • What should you, the seller, do? Generally you can indicate on the listing agreement whether you are willing to pay the buyer's agent. Most sellers choose to work with a broker who splits the commission with a buyer's agent even though that agent does not represent the seller's interests. This, of course, maximizes the number of potential buyers for your home. Because the listing broker already is prepared to share the commission with a seller’s agent who produces a buyer, most sellers don't mind when their broker instead shares the commission with a buyer's agent.

What is a contingency?

Maginfying Glass
A contingency is a condition on the sale put into the contract by either the buyer or seller to smooth immediate acceptance and protect against specific eventualities. Common contingencies are that the buyer obtain financing or sell their current home, or that the seller has a home inspection done or repairs certain items. Contingencies can be removed by an addendum to the contract, or they can expire if a time limit is specified in the contract.

We have the answers to your home-selling questions. Call or e-mail us or click “Ask Your Own Questions.”