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Sellers - Negotiate a Higher Price
Sellers - What is the Real Offer
Per your request, this article has been sent to you by Dean &
Andra Cowles of Re/Max Advantage.
What is the Real Offer
Often, sellers make the mistake of only considering the price when
the buyer makes an offer. Many people's gut reaction is that the price is
"too low" and immediately reject the offer.
That could be a mistake. If you listen carefully, hidden inside
the offer may be pearls of information that would make you reconsider accepting
less than full price. You don't want to reject any offer out-of-hand. Let us
consider the deal carefully. It almost always consists of two parts. The first
part is the price. The other part is the terms.
Price and Terms
First ask yourself what you want out of the deal. A less than full
price offer would have to list terms that were appealing.
Good Terms a Buyer Might Offer
- Higher-than-market-interest second (or first) mortgage in your
favor
- The buyer will pay for all or part of your closing costs.
- Taking a problem house "as is" (not asking you to fix
the problem).
- Quick close (short escrow).
- All cash deal (when other are asking you to accept
"paper").
- Letting you rent back the house for a time (if you're having
trouble finding a place to move to).
Items to Check Carefully in the Offer
1. Is the buyer pre-approved? You want to know how qualified the
buyer is to make the purchase. While you may not care about the buyer's actual
name, you're looking for a strong pre-approval letter from a lender saying that
this buyer will get a mortgage sufficiently enough to make the deal. If the
buyer is putting down a substantial amount of cash, say 20 percent of the
price, you also want to see a letter from a bank, certifying that the buyer has
sufficient funds on hand to close the deal. Some smart buyers these days will
even come in with a credit report to show you.
2. How quickly can the buyer close the deal? A buyer who's ready
to close in 30 days or less indicates strength. The buyer presumably has all
his or her ducks in a row in terms of financing. A buyer who needs 45 or 60
days to close may be stretching, hoping to snag financing. Or this buyer may
simply be trying to tie up your property as a kind of fallback position, while
looking for other, better deals. Always question why a buyer needs extra time.
3. Are there any sweeteners? A sweetener is a term or condition
that makes the deal sweeter for you. Usually, these are the first things that
agents point out. For example, you want to stay in the house an extra 2 months
while your kids finish school and the buyer is willing to go along with this.
That's a sweetener.
4. Are there any cash incentives? Is the buyer offering to pay you
extra interest on a mortgage you're willing to carry back? Is the buyer willing
to pay for any of your closing costs?
5. Is there another property involved? Some buyers are cash poor.
Instead of offering a cash down payment, they may offer a mortgage on another
property, or even that property itself. This complicates the deal, but could be
a real boon. Be sure you have a realistic appraisal of the other property as
well as a title report listing any liens so you can judge the value of the
offer.
6. Are there any negative terms? A negative term can be anything
that makes the deal less attractive to you. Contingencies that favor the buyer
are negatives. Some you can expect, such as demands for a professional
inspection and disclosures. Others, such as a demand that the sale be
contingent on the buyer not losing his or her job or that interest rates not
climb beyond a certain point, may weaken the offer. Yet others, such as a
demand that the offer be contingent upon the buyer's great uncle in North
Dakota coming through with a promised gift of money, may make the offer
frivolous.
7. Is the price acceptable? Note that the price is last on this
list. You won't really know if the price is acceptable until you've read the
entire offer and understand it. Only then can you make a determination about
whether you'll accept the price. Don't let the price deter you from considering
the overall deal. Again it is only one part of offer.
Take Your Time
When an offer is presented, a time limit may be attached to it.
For example, a "Cinderella" deal is good only until midnight of the
same day. You might receive it at 9 p.m., which leaves a window of three hours
to accept, reject or counter.
The idea behind this strategy is to force a seller to act swiftly.
Most buyers will allow enough time for careful consideration. The important
point here is to not be pressured by a deadline. You need to have enough time
to feel comfortable with your decision. In other words, TAKE YOUR TIME! It is
better to lose an offer than accept a bad one.
Always take enough time to fully consider the offer.
Negotiate N