What is in a Buyer’s offer?
What should you expect when you sell a home once your home is listed for sale?
You’ve planned and completed the necessary preparations to get your home listed for sale , now what?
Being able to learn ahead of time will benefit you greatly when the time comes to review a Buyer’s offer.
The nuts and bolts of a prospective Buyer’s offer:
- What is their offering price?
The offering price is really where the consideration from a Buyer to purchase your home begins. It can be right on the money, over your home’s list price or disappointedly below your home’s list price. Don’t be disappointed by a below list price offer as it’s simply the beginning of the negotiations and a skilled Real Estate Agent can work to get the Buyer’s offer where you’d like to see it. More times than not, a well priced home will bring in an offer that you’d be happy with.
- How much are they putting in escrow?
Monies put in escrow show that the Buyer is willing to enter into a Real Estate purchase agreement/contract with you as the home Seller. It shows their willingness to buy your home. A Buyer’s escrow deposit is put into a third party’s account, such as a Title Company, Brokerage and/or Attorney, and set aside for the home sale and applied once all terms and contingencies of the Real Estate purchase contract are met between the Buyer and Seller.
A escrow deposit should show the Buyer’s genuine interest in purchasing your home. Typically, a minimum of several thousands dollar, 1% of the purchase price or more is advisable. A Buyer’s escrow deposit can often show their genuine desire to purchase your home and not wanting to lose the home to any other competing Buyers, when their escrow deposit is above the minimum of 1%. The amounts vary amongst price points and whether paying cash or financing. How serious is the Buyer of the home you’re selling?
- How much time are they allowing for you to respond to their offer?
If a Buyer is being represented by a knowledgeable Real Estate Agent, you will have to respond to the Buyer’s offer within a set time period which can range from one day to several days. Normally, this time frame will be kept to a minimum number of days as the Buyer wants to know your decision to their offer relatively fast. In case you reject their offer they don’t want to have to lose any other opportunities that may come up on any other homes that are listed for sale. It’s important to note, that you need to abide by the requested contract return by date or making sure you change it pushing the date out further having the Buyer initial your initialed change so you don’t risk not having a binding contract.
- When do they want to close?
Are they requesting a typical 30-45 day closing or are they asking for a quick close or perhaps, longer close? Are you in agreement with the closing date that they have requested? Do you need more time to close?
- What are their funding terms; cash or financing?
Cash requires Proof of Funds (POF)
When a Buyer is submitting an offer to pay cash for your home, you will want to see the Buyer’s ability to pay cash. The Buyer will need to present a recent account statement that shows they have the available cash to buy your home. This statement needs to be in the name of the Buyer whose name is on the contract, needs to be a recent statement and the funds need to be liquid and not tied up in an illiquid account such as stocks and bonds which doesn’t guarantee that they can be sold and for what dollar amount. You want to make sure that they have “Cash” on hand readily available to complete the home sale.
Financing requires pre approval
If a Buyer is financing the home sale, you want to make sure that they have been “Pre Approved”. When I say “Pre Approved” it means that their Mortgage Lender has actually reviewed their credit report, requested and reviewed their bank statements and requested and reviewed the pay stubs. Upon reviewing their credit, assets and income, they can then come to a determination that they are a good candidate for a final loan commitment. Please understand that this is not a guarantee, but it certainly allows greater assurance of securing that mortgage. Without this, there is no meat behind the Buyer’s ability to get a loan to buy your home.
Read more about a Pre Approval: “Why do I need to get a Mortgage Pre Approval?”
- When will they provide a loan financing commitment if they’re getting a mortgage?
Look closely at the financing commitment date provided to make sure it’s provided in advance of just days before the day of closing. A quality Lender can provide a loan commitment within 15-20 days. Most contracts default to allowing 30 days, however a strong Buyer’s offer will not allow such lengthy times. It’s best to know the Buyer’s final loan approval (loan commitment) as soon as possible. You need a loan approval to be able to close and hand over the keys. A loan approval indicates that all conditions set by the Lender have been met by the Buyer and they will give the Buyer the mortgage to complete the sale of your home.
- How quickly will they get a home inspection completed?
Many contracts offer a 10-15 day time period in which to complete an inspection of your home. Buyers who really want to have an attractive offer will often present completing a home inspection within 5-7 days. Dependent upon your local Real Estate market, these periods will likely reflect a Seller’s market or Buyer’s market. A Seller’s market will likely present shorter time periods when Buyers know the inventory of homes in their area are low, therefore having increased competition from other Buyers. A Buyer’s market raises a Buyer’s level of confidence when they know they have many homes to choose from so they may think they can take all the time in the world to complete their inspection.
- Who is selecting Title (Closing) Company and paying for Title Insurance and related fees?
Did you know that certain counties here in Florida have customary guidelines setup as far as what party selects the Title (Closing) Company for the selling of your home? It’s true! In Broward county, it’s customary for the Buyer to select. If you’re selling a home in Coral Springs, this could make you happy that it’s one less thing to have to pay for when you sell a home. Whereas, in Palm Beach county it’s the opposite, so if you’re selling a home in Boca Raton, you’ll likely have to pick up the expense.
The payment of Owner’s Title Insurance, title searches and municipal lien searches can also vary to be paid by Seller or Buyer. Of course, even though any of the closing costs, fees and charges may be customary, it can differ with each individual sale during part of the negotiation process.
- Are they asking for any assistance with closing costs?
Sometimes you will see that a Buyer will request monetary assistance from you to go towards their closing costs and prepaid items. This can be requested as a certain dollar amount or a percentage of the purchase price which is typically capped at 6%. When financing a home purchase, Lenders will have caps on what they allow the Seller to contribute towards assisting Buyer with any closing costs and prepaid items.
You may also find that the Buyer sometimes will add this requested dollar amount onto the top of the purchase price so when in effect you won’t actually provide the “extra” dollars, but they will simply be adding it to the purchase price and the dollar contribution can be used for their closing costs and prepaid items. For example, if your home’s list price is at $350,000 and the Buyer offers you $371,000 requesting 6% to be used towards their closing costs and prepaids, the 6% ($21,000) was added to your home’s list price to cover what you are asking for the home, but allowing them to have money to use at closing. Keep in mind when this method is employed the home must now appraise for the higher dollar amount, so this method does not always work out if your home isn’t going to appraise for the higher dollar amount. Does this make sense? Feel free to call/text/email me if you need clarification about how this affects selling a home. (954-464-1100 or LynnP@ImagineYourHouse.com)
The intertwining of these nuts & bolts in an offer can make for the beginning of a beautiful offer that starts with the price, right through to the closing. It’s important to note that the varying degrees of these nuts and bolts will likely be dictated dependent upon the type of Real Estate market that is being experienced in your local market. A REALTORⓇ should always advise the right direction knowing the local market. Be sure to ask. Making sure you’re knowledgeable in what to expect when it’s time to sell a home, makes all the difference in keeping your sanity throughout the home selling process.
Book an appointment now to learn more about the nuts & bolts to sell a home in Coral Springs Florida or anywhere in Southeast Florida. Call Lynn at 954-464-1100 or email Lynn at LynnP@ImagineYourHouse.com
Today’s article “Learning the Nuts & Bolts of a Buyer’s Offer When Selling a Home in Coral Springs” written by Lynn Pineda. You’ll find Lynn selling homes in Southeast Florida in the cities of Coral Springs, Parkland, Margate, Tamarac, Coconut Creek, Boynton Beach, Delray Beach, Boca Raton, Sunrise, Plantation, Ft Lauderdale, Pembroke Pines and Miramar areas within Broward and Palm Beach counties.
Lynn Pineda, a licensed Southeast Florida Real Estate Agent serving Coral Springs Florida and surrounding Southeast Florida. Keller Williams Coral Springs Realty. April 30, 2015. Real Estate Promises Delivered. You can speak with Lynn by calling/texting her at 954-464-1100 or you can email her at: LynnP@ImagineYourHouse.com if you need to sell or buy a Southeast Florida home. Your local, trusted professional when it’s time to buy or sell a home. Real Estate promises delivered.