5 Things Other Than the Price to Consider in an Offer
When your home is up for sale the day will come when you receive an offer to purchase your home. This will bring much excitement and during a seller's market, this may even bring multiple offers.
When the offer(s) comes in, you may wonder if this or which offer is the best option for you. This is where your real estate agent is going to be a source of very helpful advice. They can help you to look over the offer(s) in detail because an offer is not solely about the amount of money offered.
5 Important Things to Consider Other than the Purchase Price of an Offer
Earnest Money Deposit
This is the amount of money the buyer is willing to put upfront in cash to show they are making a serious (earnest) and solid offer and will follow through on the purchase of the home. This money is usually held by the title company and goes to the down payment at closing. Should the buyer walk away from the purchase for any reason other than allowable through the purchase contract they forfeit the money to the seller.
Standard earnest money deposits are about 1 to 3 percent of the purchase price of the home, but buyers can include higher amounts to win out a bidding war or help entice your offer acceptance to show they are making a serious offer.
Almost every offer is going to come with a contingency or two. A contingency is a request from the buyer that must be met for the sale to go through. The most common are having a professional inspection performed and financing. If a contingency is not met then the buyer has the option to walk away from the home with their earnest money. Other contingencies can include:
- Buyer needing to sell their current home
- Making Fixes or Upgrades
- Seller Paying all Closing Costs
Contingencies are always negotiable before signing a final contract and entering into a pending status.
The size of the down payment on a home can give clues about the strength of an offer. The biggest concern as a seller accepting an offer is for the buyer’s mortgage to close and the sale to go through. The larger the down payment the more likely the buyer is to be able to secure their financing. The average down payment according to the National Association of Realtors is 10% of the loan amount. The more cash a buyer puts down on a home the more likely a bank is to offer them money to borrow as well.
The more of their own cash a buyer uses to buy a home, the less the lender will require in order to finalize and close the loan. They can waive items like the appraisal or even an inspection in some cases. With an all-cash offer, there can be no contingencies at all except what the bank may require for the transfer of large sums of money.
The closing date is when both the buyer and the seller sign the last paperwork and make the sale and transfer of ownership official. This whole process takes an average of 30 to 60 days. Certain types of loans can take closer to 60 days due to more paperwork. Looking at the expected closing date set on the offer is important. Especially if you need to be in your next home by a certain date.
Right now many home sellers are receiving fast offers on their homes and some are receiving multiple offers. Always make sure to look at the details of the offer beyond the purchase price to help you determine if you want to accept it. Your real estate agent can give you some great advice on the details of any offer on your home.