How To Deal With An Offer On Your Home

By Cory Shuett, 23 Jan 20:52

Entertaining Purchase Offers
Sooner or later, a possible buyer (or a buyer's agent) will call you or your agent up and say they want to give you an offer for your home.

You plan to meet each other, most likely at your house, and you start thinking. Will it be a full-price offer? Will it be higher than the listing price?

Keep in mind that this is a business deal.

Read through the documents so you are familiar with the language of an offer ahead of time: a purchase and sale agreement, inspection reports and closing papers. The types of forms vary from state-to-state and from town-to-town. They are available from an agent, attorney, office supply store or online. Be sure they are personalized to your location. You want to be familiar with the Fair Housing Act, too. This will remind you not to show prejudice against someone because of race, religion, etc.

A legal offer is in writing, dated and signed. It could, but probably shouldn't, be scribbled on a piece of paper. Offers are normally organized on a form that is frequently used in your neighborhood.
In some states: two forms are used: one for the offer and one for the full purchase contract. No matter your location, the offer will include the buyer's essential terms:

1. The purchase price. This is most likely not your complete listing price unless it's a good seller's market

2. A report laying out how the buyer will finance the home

3. A request for you to consent to an examination by an inspector hired by the buyer

4. A commitment to successfully reach a contract

5. A deadline, usually two days, for agreeing to
the offer

State and local laws can vary, as do the documents for making an offer and writing a sales agreement. Therefore, the offer you get from a buyer may cover more than the essentials:

Attachments

The offer should come with a check (known as a good faith deposit, or earnest money) that lets you know that the buyer is serious about working with you.

Experts sometimes say that the larger the check is, the more serious the buyer is. They recommend that a check to be 1-10 percent of the purchase price. In some areas, a check for $1,000 is to be expected. Be sure of the customs where you live. Buyers will give up the deposit if they don't meet their requirements, so to the seller, the larger the check, the more willing a buyer is to accept it.

A pre-approval letter from the lender ought to be attached to the deal. Keep in mind that being pre-approved is better than being pre-qualified. The seller will be able to tell that you are working with a good buyer whose financing will make it through promptly. It wouldn't hurt to have your agent give the lender a call to confirm the authenticity of the letter.

Reacting to the Money Offered

An intelligent buyer will listen to instruction and is not likely to give you a low-ball offer. Others could give an offer so low you that you want to tear it up on sight. Keep in mind that any offer is better than no offer.

Remember your ultimate goal of buying a new home. That requires you to sell the home you currently live in. Consider your negotiation tactics before immediately rejecting the low offer.

Control the Emotional Reactions

If neither you nor the buyer has an agent, you may hear things that make you angry inside. Suppose the would-be buyer brings her best friend and tells her that she wants to use weed killer on your award-winning garden.

How are you going to respond? If you would not be able remain cool, leave the negotiations. Your agent can handle it. If you don't have one, you can make a offer with one for a lower commission.

How to Accept an Offer

When an offer arrives, you can choose to accept it, reject it, or make another offer. If you want to accept an offer in its present condition, just sign it, date it and return it to the buyer by the deadline.

A Real-life Example

A couple was enjoying a large profit on their investments, but they discovered that they were over their financial limit when they built their dream home. When the market weakened, reality set in: they needed a cheaper home. Hesitantly, they put their dream home up for sale.

At their first open house, a couple instantly fell in love with the house. They liked everything that the sellers built and offered a suitable price dependent on receiving financing.

The sellers agreed to a back-up deal in case the first went wrong, but they were not able to take the offer from the second-in-line buyers. A new couple was hardly aware of the details the sellers treasured the most about their home, and they had rowdy, badly behaved kids. The sellers realized that their dream home would soon be in terrible condition.

Unfortunately, the first couple was not able get financing, so the home was sold to the family that made the second offer. Months later, the sellers still stayed away from their dream home because of its new owners.

The lesson is not to let your dislike of buyers prevent a good deal from working.
Odd are you will accept the first draft of a deal if it's one of scores of deals you got in a bidding war. It's more likely that you will make another offer, attempting to receive more money and perhaps modify some of the terms.

When you and a buyer sign and date a contract, you are legally bound to proceed. Your house is not sold quite yet but it is technically off the market. You now have a pending sale. You can accept backup offers just in case the buyer does not receive a loan or the inspector discovers a problem. You still need to work with the first buyer.

There are always things that can go wrong after you accept a deal. The deal is not finished until the deal is closed and recorded at the proper government office.

Here are a couple tips:

1. Go over all of the forms used in your area's home sales transactions before you agree on an offer and begin working out an agreement. Remember to read the fine print.

2. Remember your net profit when you consider deals.

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Tags: purchase contract offer