How to Review and Negotiate Offers
When you’re selling a house, you’ll likely get several offers, sometimes all at the same time. So knowing what to look for in the offers and when to negotiate is important. Here’s what you should consider.
Review the Entire Offer
Don’t just look at the dollar signs when you receive an offer. There’s a lot more to it, and if you focus on price alone, you may end up with the short end of the deal.
Look at all conditions the buyer requests, such as any contingencies, seller concessions, or even closing date requests. Then, look at the big picture and see how it fits into your plans.
Assess the Earnest Money and Down Payment
The earnest money and down payment is important to the real estate offer. They prove whether a buyer is serious about buying the home. A buyer that won’t make an earnest money deposit is likely less serious about buying your home than the buyer willing to put down 3% – 5%.
Also, look at their down payment on their pre-approval letter. Are they making the minimum down payment or making a larger investment in the home? The larger the investment, the more serious they are.
Closely Review What the Buyer Wants
A buyer’s offer will include many stipulations or requests. Pay close attention to them and see how they affect your bottom line. For example, are they asking for more personal belongings than you intended to include?
Even if they ask for more than you want to leave, consider the dollar amount they’re offering and compare it to what you’d lose if you provide the personal belongings.
Calcluate Seller Concessions
If the buyer asks you to help with their closing costs, mortgage insurance, or to fix certain issues with the house, determine how much it reduces your profits from selling your home. Even if they offer the amount you want for the home, any help you provide the buyer reduces your profits.
Before agreeing to help with closing costs or cover the cost of certain repairs because that’s what the buyer wants, consider how it affects your bottom line. Sometimes it’s better to pass on the offer and accept the offer without as many concessions.
Consider the Contingencies
Many buyers will include contingencies in their offers. Contingencies are ways out of the contract without losing earnest money. This means the buyer will only buy the house if certain conditions occur. Evaluate the contingencies and determine which (if any) you want to accept.
Knowing how to review and negotiate offers is important. If you don’t like something in an offer, don’t be afraid to negotiate it. You don’t have to accept an offer at face value. Instead, decide what you want from the sale and evaluate your options.
Even if you only have one offer on your house, don’t rush into an offer. Instead, evaluate it and how it affects your bottom line before accepting any offers.