Step 13: We’ve Received an Offer!

Fabulous! We’ve got our first offer.

We’ll review it carefully together. There are a few main points we want you to pay particular attention to in the offer.

Offer price

What price did you want for your home? What is the least amount you’d be willing to take? How does this offer compare?

Closing timeframe

Typically, in Indianapolis, closing takes place 30-45 days after contract acceptance. If a buyer is paying 100% cash, we can usually close faster than 30 days, but 30 days is generally the required minimum if the buyer is using a mortgage to buy the property.

Sometimes buyers will ask for a later closing date if they are doing a special loan program, need to give their landlord a longer notice, need to sell their current home, etc. Can you work with this?

Earnest money

Earnest money is essentially a good faith payment showing the buyer is serious about moving forward.  How much earnest money is the buyer putting down? The typical amount is 1%. If the buyer is putting down less than that amount, it could mean that the buyer is doing a special loan program that requires a down payment of 0% – 5%, such as a VA loan or FHA loan. Or it could mean the buyer is a bit shaky financially. Ideally, we like to see buyers put down at least 1% in earnest money.

Down payment

Depending on the buyer’s particular loan program the down payment could be anywhere from 0% up. Personally, I like to see the buyer put down at least 5% (20% is ideal) unless they are doing a special loan program like a VA or FHA loan. The more they are putting down, the higher the chance that their loan receives approval.

Closing cost credits

Does the buyer want you to pay a portion of their closing costs? If so, how much? Please note the amount they are asking for comes off your net proceeds. So, if a buyer is offering $500,000 for your home, but wants a $10,000 closing cost credit that means the offer is only $490,000.

Home warranty

Did the buyer ask you to provide a home warranty? Depending on your home, this can cost you anywhere from $400 – $1000 and comes out of your net proceeds at closing.

Personal property

Did the buyer ask for any of your personal property to be included in the contract such as that great lamp in the living room or the bar stools in your kitchen? You do NOT have to include these items, but if you’re not that attached to them, it’s a small way to create good will with the buyer that might help with other contract negotiation points. (Keep in mind that anything that’s attached is typically expected to stay with the house).

Contingencies

Are there any contingencies the buyer has placed on the contract such as needing to sell their own home before they can close? Are there any additional riders or addendums on the contract? How will those affect you?

Click to see a blank Purchase Agreement.

Once an offer comes in, we’ll discuss all of the above, and then you can decide whether you want to accept the offer. I will prepare a Seller’s Net Sheet that shows you the bottom ‘financial line’. We can then accept the offer, counter the offer, or walk away from the offer. If we decide to counter, realize that some negotiations move fast, and others move slowly. We’ve had some negotiations take 2 hours while others have taken two weeks. It just depends on how quickly each party makes decisions, how fast the buyer’s Realtor relays that information, if everyone is available and easily reachable, etc.

Try to be patient.

 

 

 

Posted on November 24, 2018 at 4:44 pm
Lee Ann Balta | Category: Seller Step by Step

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