A buyer submitted an offer to purchase your home. Depending on what the offer contains, you may be excited, disappointed, or maybe a little unsure about whether you should accept it or not.
Here are 5 key things you should consider before accepting an offer on your home:
1. Buyer's qualifications
Serious buyers will submit a pre-approval letter with their offer to show you they are financially capable of purchasing your home. Accepting an offer without a pre-approval letter is risky, as you have no idea if the buyer can qualify for a mortgage or not.
What's even better is a Direct Underwritten letter. The under writter is the person who offically says yes or no, to giving the loan.
It typically takes about 30 days to close on a home (in this market we have seen 14-21 days as well). Does the tentative closing date on the offer work for your schedule? Do you need to enter a "rent-back" agreement with the buyers to give yourself more time to make moving arrangements? If so, does the buyer have the flexibility to do so? Your timeline must match up with the buyers for a smooth sailing closing.
3. Earnest money
Earnest money is a deposit made to you (the seller) with the purchase agreement representing a buyer's good faith to buy a home. An earnest money deposit is generally 3% of the purchase price. If the buyer backs out due to a change of heart after the contincenies have been removed, you (as the seller) will get to keep the earnest money. Earnest money is not technically required; however, an offer with an earnest money deposit is definitely considered to be a safer and more legitimate offer.
Appraisal, loan and inspection contingencies are three of the most common contingencies you’ll find in a real estate contract. Home sale and settlement contingencies are riskier to sellers, as there’s no guarantee the buyer’s home will sell or that you will successfully make it to closing. If you are considering accepting an offer with high-risk contingencies, be sure the offer is strong in other areas (financing, earnest money, timeline, settlement date, etc).
You shouldn't just focus on the price tag when deciding which offer to accept, but the offer price on a contract is still an important factor to look at. Consider how long your home has been on the market, the condition of your home, the current real estate market, and how many offers you've received before deciding what you consider to be a fair sale price.
Looking to sell your home in the next 3-6 months? Send me a message and I’d love to chat more with you + answer all of your questions!