Sellers want to maximize their profits, but price is just one component in a purchase offer. Savvy sellers need to slow down and analyze what is being presented before they start planning a celebration dinner.
If they accept an offer too quickly and the deal fails to close, they’ve lost valuable momentum and marketing time. When it comes time for you to sell, stay calm and listen to the advice of a trusted real estate professional. Almost everything in a real estate deal is negotiable.
Price is definitely a major factor to consider when evaluating a deal, and it’s hard to complain about a full-price offer. If the initial offer is too low, the seller can make a counteroffer. Sellers often agree to a lower price if the offer is for cash. Many transactions fail to close because the appraisal value is lower than the offered price, or the lender doesn’t approve the buyer for a mortgage loan. A cash offer can eliminate both potential pitfalls.
Earnest money is proof of the buyer’s good intentions; the seller may receive this money if the buyer cancels the contract without a legal reason for doing so.
The buyer’s real estate agent collects the money from the buyer after the offer is accepted, and a real estate broker, attorney or title company holds the funds in a trust account. The money helps pay the buyer’s closing costs if the deal successfully closes. The amount of this good faith money varies by region and market conditions, but three percent of the offer price should be satisfactory.
Proof of Funds
Never accept a cash offer without seeing proof of the buyer’s ability to pay. This may include a bank or brokerage account statement with the buyer’s name visible on the printout.
Think twice before accepting a financed offer without first seeing a pre-approval letter from a lender. At the very least, insist on seeing a pre-qualification letter from a loan originator stating that the borrower’s credit score and verbal discussion of debt and income is adequate for loan approval. Many deals fall apart because the buyer is unable to obtain a mortgage. Smart sellers want to minimize the chance of that happening to them.
An as-is contract allows the buyer to have a home inspection but eliminates the requirement for the seller to contribute money toward repairs. The MLS listing should specifically request that offers be submitted using an as-is contract.
If the sellers are prepared to leave or have already vacated the property, a quick close is preferable to a long delay. Unexpected events like a fire, wind damage or flood can ruin a deal. Financed transactions may take 40 days to complete, while 2-3 weeks is usually possible for a cash deal. Cash deals take that long because of the home inspection, lien search and property survey.