Are you in the process of selling your Waterloo Region home and weighing multiple offers? Or hoping to be in that position soon, as you are planning to sell your home soon? Congratulations! You're well on your way to making the most of what is possibly your most valuable asset.
When it comes to choosing an offer, though, it's frequently necessary to take a step back and acknowledge that your bottom line isn't the only factor to consider.
In many cases, the terms included in an offer by a potential buyer are also crucial. They can highlight how many obstacles you'll have to overcome in order to get to the closing table on time. As a result, before deciding on a buyer, every seller should thoroughly analyze an offer—and look beyond the dollar amount.
We've identified five essential elements that home sellers should look for in an offer to help you manage all of this. Everything you need to know about picking the best one is right here.
1. Determine Your Preferred Financing Method
As a seller, you most likely have a target bid amount in mind that you want the buyer to meet or beat. However, regardless of the numbers stated in an offer, a buyer must demonstrate that they can finance the purchase.
A pre-approval letter on the lender's letterhead should always be included in an offer if the buyer expects to secure a mortgage.
Ask for proof of funds before accepting a cash offer from a possible buyer. A bank or investment account statement is the most common type of verification. Each should demonstrate that the buyer has the finances to finish the purchase.
Do you need to sell your house quickly? You might choose an all-cash offer in that case. Because cash eliminates the need to wait for a buyer's full mortgage approval, this kind of offer usually carries less risk and has a shorter escrow time.
However, sellers should be aware that all-cash purchasers have more bargaining power. And they'll expect something in exchange for bringing a bag of cash to the sale. They might, for example, make you an offer that is lower than the asking price. Alternatively, demand a lot of concessions from you in terms of closing times, maintenance, and so on. So, before accepting an all-cash offer over a buyer with a mortgage, make sure you weigh the advantages and disadvantages.
2. Consider the Advantages of a Larger Earnest Money Offering
Next, look for an offer that includes a substantial earnest money deposit, sometimes known as a good-faith deposit. This is money that a buyer gives to the seller's brokerage business to show that he is serious about buying the house.
It's standard to put down a deposit of 1% to 2% of the sale price. The stronger the offer, however, the bigger the deposit.
If the buyer eventually closes on the house, the earnest money deposit goes toward the down payment. If the buyer, on the other hand, breaches the contract and fails to complete the purchase, you may be able to keep the deposit as compensation.
3. Look for the Fewest Contingencies
Contingencies are requirements specified by buyers that must be met in order for the transaction to move forward. Many buyers, for example, will wish to add an inspection contingency in their purchase agreement. This means that the buyer will need time to inspect your home. If any problems are discovered, a buyer may require you to make repairs before closing on the house.
An acceptable appraisal of your property is required under an appraisal contingency. If the appraisal doesn't match the home's agreed-upon price, you and the buyer will have to come up with a new figure before closing.
The drawback here is that if a contingency isn't met, the buyer has the option to back out of the deal and keep his earnest money deposit.
Obviously, the fewer possibilities the buyer has to back out of the transaction, the better for the seller. With that in mind, it's a good idea to start by choosing an offer with the fewest stipulations.
It's just as vital as the sale price to choose an offer with very few contingencies. As a result, even at reduced sales prices, cash offers are frequently accepted. A cash offer, in the eyes of the seller, eliminates much of the risk of the deal falling through due to a buyer's inability to obtain financing or an appraisal value that falls below the sale price.
4. Keep the Closing Timeline in Mind
Consider when the best time is to go to the negotiating table. It takes a lot of effort to move out, especially if you've lived in the house you're selling for a long time. As a result, you'll want to make sure you choose an offer with a closing date that works for you.
It's all about the timing. While many sellers prefer a rapid closing, some require more time to relocate. In that situation, even a lower sale price may be more appealing if the date is more convenient for them.
5. Listen to Your Real Estate Agent
As your real estate agent, we will receive, and then pass on to you, any and all offers received on your Waterloo Region home. We want you to make your own decisions here, but we will offer our opinions and guidance, especially if there are a number of offers to compare and evaluate.
These opinions will be offered based on our experience both in the short term as people who have been active in the market very recently and know what's going on right now, and on our long term experience in general. A good real estate agent will never cajole you into picking one offer over another for their own benefit (actually, that's very illegal), but we may offer our opinion, and hope you take that advice into consideration as well.
Getting ready to sell a Waterloo Region home, or buy a property in the KW area? Let Team Pinto use their huge local real estate experience and expertise to help you. Contact the award-winning Team Pinto here, or book a free Zoom consultation to discuss your unique Waterloo Region real estate needs here.