Components of the real estate offer – what to consider when you receive an offer on your home for sale – When a Seller receives an offer on their home for sale, it’s important to look at all the components of the offer.
The Buyer didn’t offer full price – are you surprised?
Did the Buyer ask you to pay part of their closing costs? How much did they ask you to pay in repairs? Did they ask for a home warranty? Does the Buyer want to close in a time frame suitable to you?
Let’s compare the components of two real estate offers and assume that your home is listed for $200,000.
Buyer A offers $190,000, has conventional financing and is paying 20% down, asked for $500 in repairs and would like to close in three weeks.
Buyer B offers $198,000, has FHA financing and is paying the required 3.5% down-payment, asked for 3% in closing costs ($5,940), asked for $1,000 in repairs, asked for $500 in new guttering, a $420 residential service agreement and would like to schedule closing five weeks out.
Buyer A’s offer will net $189,500 and you will no longer be paying utility bills in three weeks.
Buyer B’s offer will net $190,140 — $640 more than Buyer A’s offer.
Do you see that Buyer B’s offer is beginning to look like a shopping list? The more a Buyer demands, the more red flags are raised.
Components of the real estate offer – what to consider when you receive an offer on your home for sale
There’s much to be said for what Realtors refer to as a “clean offer,” which means that the components of the real estate offer are simple, clean and less demanding. While at a glance, the offer with the higher sales price seems more attractive, it may not be when you put pencil to paper.
With each offer, your Realtor will prepare a “Net to Seller,” showing what you will net based upon the components of the real estate offer. Look at the bottom line. In this example, Buyer B’s offer will net $640 more, but this Buyer may be more difficult to work with. Remember that some re-negotiating may occur after inspections are done and repair bids are obtained. Which Buyer do you think will agree to repair a few items after closing instead of demanding that you repair every tiny thing found by the inspector?
Earnest money, repairs, residential service agreements, type of financing, closing costs – these are all components of the real estate offer that you will consider when you receive an offer on your home for sale.
Of course, you will most likely counter any initial offer that you receive that is less than full price. The longer your home is on the market, the more negotiable you will have to become. So, don’t be offended by what you consider a “low-ball offer” the first week on market. Evaluate all the components of the real estate offer and counter with your Realtor’s guidance.
Lori is a residential Realtor serving the greater Tulsa area, and specializing in midtown Tulsa real estate. Please visit Lori’s web site, LoriCain.com or call 918-852-5036.