Negotiating Real Estate Offers
You placed your home for sale in St. Augustine
on the market and it has been shown many times, now is the moment you’ve been waiting for. You received an offer to purchase the house! Now what!? Is it a good offer? Should it be higher? Have you received multiple offers? At this point, we must stress the importance of working with a REALTOR® that you trust
. This REALTOR® will sit down with you and explain the pros & cons of the received offer, but ultimately it will be your decision to make. This blog contains tips you will want to know when negotiating an offer on your home for sale in St. Augustine, and will hopefully help you feel more confident as those offers come in.
An Offer to Purchase is the legally binding document that outlines the terms and conditions under which a purchaser is prepared to buy your home for sale. The offer will include general information such as both parties' names, the address of your property and all necessary dates. It will also include a negotiable purchase price; this being the first price offered, a list of the contents that may be sold with the home, and all financial details such as, the proposed down payment, amortization rates and terms, as well as the closing and expiration dates.
The price offered for your home for sale in St. Augustine is, of course, instantly where you will look first. This price is not what you will collect at closing. You will need to figure the sales price minus fees, taxes and insurance. If the price is lower than what you were expecting don’t automatically reject it. There are other terms of the contract that you will need to take a look at before you can decide if this offer is acceptable to you.
ASKING FOR CLOSING COST CONCESSIONS
Before deciding on an offer, the reviewer needs to look at the closing costs section of the contract. If the buyer is asking for closing cost assistance it is in fact lowering the offer price. I hear it all the time from agents as well. “I’ve made a full price offer.” What they don’t see is that the buyer is asking for 3% closing cost assistance from the seller. If the offer price is $100,000 with 3% closing cost assistance, the seller would have to contribute $3,000 to the sale. In this way, reducing the offer to $97,000 not $100,000.
CASH OR FINANCED?
Is the buyer planning to finance or pay cash? When an offer is made with cash there are several advantages. One advantage is there is no financing contingency period. Financing contingencies can last from 30 to 60 days. This is time the property is off the market and not being actively marketed for sale. If the financing falls apart after this deadline, the contract is dead, the buyer gets their deposit back, and the seller gets to start all over again. With a cash offer, you don’t have to worry about this time period and can close a lot sooner.
Another advantage of a cash offer is you don’t have to worry about the property appraising. When dealing with financed offers it is important to remember banks loan money based on two things: the agreed sales price, or the appraised value, whichever is lower. If a bidding war drives the asking price up, the house will still have to appraise at the higher price if the offer is made with financing. If the appraisal comes in at a lower than agreed upon price, the seller has two options: void the contract and start over or lower the contract price to the appraised value. With a cash offer there is no appraisal and you can close much sooner.
HOW MUCH IS IN ESCROW?
An earnest money deposit will be held by a third party until an agreement is reached or there is a closing between you and the buyer. At that time, the money is usually credited to the buyer and applied to the down payment. Until you accept his or her offer, the buyer may withdraw the offer and get the earnest money back. On the other hand, if the buyer fails to follow through with the contract once it's accepted, you may be entitled to the earnest money. The more money they put on the line, chances are the more serious they are about purchasing the property.
When reviewing an offer check for repair requirements and/or allowances in the contract. Even a cash offer could have a stipulation in the offer stating the seller must perform repairs. “As-is” contracts are the only exception. As “as-is” contract is just that, the buyer will buy the property exactly how it sits with no repairs done by the seller. Financed offers will sometimes be submitted without an call for repairs or allowances; BUT it is not only up to the buyer and seller. The buyer’s lender will have requirements that the seller MUST perform before closing.
Buyers will sometimes ask for a seller to leave personal property as a part of the deal. Items that are most commonly requested are refrigerators, washers, dryers, and window coverings. This gives you more bargaining power.
What if you have multiple offers? First of all, congratulations! The first step is to notify all parties that you are now in a multiple offer situation and all parties need to submit their highest, best, and final offers. Once you have received them all, now it’s time confer with your REALTOR® and choose one.
List your home for sale in St. Augustine, let us market it, and then it will be time to negotiate for the highest possible price with the least amount of inconvenience and in the quickest amount of time. Like with most transactions in life it will only come together if you have both parties willing to give and take. Team Johnson of Alta Realty Company are all exert negotiators. We are always here to help buyers and sellers through this type of process. Put the power of team to work for you. Please feel free to call Team Johnson at 904-217-3711 or email us at firstname.lastname@example.org for additional advice or to answer other real estate questions you may have.