3 Factors to Consider When Evaluating an Offer on Your Home
How to Evaluate an Offer on Your House
1. Speed: how soon does the buyer want to close?
What is the closing date?
Pay attention to the proposed date of possession that’s listed. If you need to stay in the home past this date you may need to find alternative housing or lease back the property from the buyers for a period of time.
Does this date align with your timeline?
You may want to close on your home as soon as possible or you may want to close within a specific time frame due to external circumstances.
For instance, you may need to move quickly to relocate for a job or you may want to hold off on moving until the school year ends.
If the buyer wants to purchase the house sooner, are they willing to do a leaseback? A leaseback is when the buyer allows you to lease the property for a specified amount of time after it’s been sold which may be beneficial if you need to delay moving.
This is common when the seller is waiting to close on another home.
How flexible is the buyer on timing?
If your circumstances require you to move on a specific timeline, consider whether the buyer can be flexible when it comes to closing.
If you need to close faster or stay in the home longer, you’ll want to know if the buyer is willing to work with you.
2. Certainty: how qualified is the buyer?
Is it a cash offer?
An all-cash offer often means a quicker and less risky road to closing, which makes cash offers an attractive option for sellers.
Although a cash offer may come at the expense of a lower offer price, the benefit is that you won’t have to worry about the possibility of a low appraisal or third-party financing falling through.
How financially secure is the buyer?
When considering a buyer for your home, you want to make sure things go as smoothly as possible and that means a financially stable buyer.
A few good indicators of a buyer’s financial security are how much of a down payment they’re making, the amount of their earnest money deposit, and if they’re pre-approved for a loan.
3. Price: how much are they offering?
The price at which a buyer is offering to pay for your home is fairly self-explanatory, however, there are a few things to consider that may end up affecting your proceeds from the sale.
When evaluating the offer price, be sure to take into account the following:
Are the buyers offering to pay for any closing costs?
Both buyers and sellers are responsible for paying closing costs. In addition to paying the buyer’s agent and listing agent’s commissions the seller also pays another 1-3% for other closing costs.
Sometimes, buyers will offer to pay for a portion of the seller’s closing costs as well.
For instance, the owner’s title policy–the third-largest closing cost for sellers–can often be negotiated.
Other seller closing costs that can be negotiated include escrow fees, home warranty fees, HOA transfer fees, recording fees, and title insurance fees.
Are the buyers offering to pay for a new survey, if required?
Typically, lenders will require a survey to be completed before loaning money to the buyer. Title insurance companies will usually request a survey as well.
Oftentimes, the buyer will opt to use the seller’s existing survey, if they have one. If the seller is unable to locate their survey, a new survey will need to be drawn up.
Buyers or sellers can pay for this expense so be sure to check whether or not the buyer is requesting that you front the bill.
Are the buyers paying for the survey coverage?
Survey coverage is additional coverage to the title insurance policy and protects the buyer against any errors with the survey.
Generally, if the buyer is relying on an existing survey provided by the seller, they will likely opt for this coverage in their policy. Survey coverage is a negotiable item and can be paid by either the buyer or seller.
Pay attention to whether or not the buyer has proposed that you pay for this coverage.
