Step 5: Strike the Right Deal
Once your home is finally on the market and listed, it’s showtime. Will you be deluged with offers, or will your home be pervaded by the lulling but ever-so-unnerving sound of crickets?
And if you do get just one or two offers, and they’re not as high as you’d hoped, what do you do? What do you do?
Never fear, dear sellers—that’s why Steve Miller and the Nashville Home Guys are here! In this fifth step, we’ll show you how to navigate the negotiation process and come to a deal that will make you happy. More than happy, even!
Getting those offers in
If you’re not in a rush to sell your house, it may make sense to see what offers roll in over a month, but if no offers come in then your agent might want you to consider a price reduction. "There are only 3 things that sell a house—Location, Condition and Price,” Steve Miller of the Nashville Home Guys says. He goes on to add, “If the home’s location is good and the condition of the property is good and you still haven’t received an offer in a reasonable time, the only thing left is a reduction in price to rectify the situation."
“In a hot real estate market or with a home in a desirable neighborhood and you expect multiple offers, be sure to work with your Realtor to establish a deadline for the highest and best offer,” Steve says. But to avoid appraisal problems you’ll need to be confident that your home is priced right, relative to its appeal. If all goes well, you can sell for over asking.
Reviewing your first offer
Once you have an offer in hand, you’re probably scanning for one thing: the price.
“In Nashville’s hot market, homes are selling anywhere from 90% to 100%+ of list,” Steve says. The offers on your home should fall in that range, but don’t rely on price alone. Every offer has five important components:
- Closing assistance
- Closing date
- Buyer financing
Some offers may seem great on the surface, but significantly less so once you dig in. For instance: Is the buyer asking for closing assistance? Often first-time buyers don’t have enough money to cover the down payment and the closing costs, so they’ll ask the seller to foot some of the bill—about 2% to 3% of the total closing costs is a common request. This can be accomplished by raising the sale price of the home to accommodate your buyer and insure you receive the payout you were expecting.
The buyer’s time frame to close may not seem like a big deal on the surface, but it can actually matter a lot, especially if you give the buyer a long leash. If the deal falls through, you’ll have to put the house back on the market and wait for more offers. On the other hand, if the buyer wants to move in right away, you might be left scrambling (and, quite possibly, temporarily homeless). Make sure the timing works for you.
Good so far? Now make sure the buyer has financing. Hopefully, the buyer’s agent included a Lender pre-approval letter verifying the buyer’s financing and how much the buyer will put toward the down payment and earnest money. The last thing you want is to accept an offer, only to find out afterward that the buyer can’t come up with the necessary cash.
Finally, there are normally three contingencies that come with any offer:
1. Finance contingency - This makes the contract contingent on the the buyer actually being able to get a loan.
2. Appraisal - The lender will do an appraisal confirming the value of the property for the buyer’s loan.option to back out of the deal if something goes wrong.
3. Inspection - The buyer will request a period time for him and his inspectors to do inspections highlighting any problems that may exist with the home. Then there will a set amount of time for the buyer to submit any repairs they request the seller to have done. At that time it becomes a matter of negotiation to be finalized within the specified timetable.
A buyer may have some more contingencies than these that he wants to add but you can count on these and any others can be judged on a point by point basis
When to counter
You always have the option to return the buyer’s offer with a counter offer of your own.
“Anything in an offer can be countered including price, closing date, contingencies, etc. If there is something you want changed make that a part of your counter offer,” Steve says. But if you do, keep it reasonable and remember the object is to sell your house.
If you don’t agree with the buyer’s contingencies, consider your position first.
Keep in mind, the buyer may not accept your counter outright. You can play Let’s Make a Deal, but always consider your bottom line. Is it worth it to keep countering for a small amount of money or single contingency? Don’t get trapped in a loop; consider the buyer’s side of things. These prospective buyers may be maxed out. To help you decide, ask your agent to call the buyer’s agent and hash it out it with them. Get some insight into the buyer’s state of mind and whether he can budge.
Once you’ve accepted an offer, it’s time to close. Scary, we know! But Steve Miller and Nashville Home Guys have got you covered in the next step.