So, you have done the hard part and gotten your home listed for sale and now you in the enviable position to select the best offer for your home.
In this post we will recommendation on how to investigate each type of offer and the trouble signs that should tell you to avoid those buyers.
Let’s assume you have received multiple offers for your home. You will need to counter EVERY buyer’s agent with their Highest & Best offer. This counter needs to have a clearly defined deadline and has to be communicated to the buyer’s agent.
- Cash Offers: Validate the source of funds to make sure that the funds have not been transferred recently and they are seasoned. There are plenty of companies who are selling Proof of Funds for a fee to investors who are writing cash offers for the sold purpose of wholesaling them to the end buyer! You want to make sure your home sale is not held hostage by these “wholesalers“.
- Contingent Offers: These are the offers that require approval of a loan or property inspection. If you are in a position to choose an offer with no contingencies, then you should select that one. For instance, buyers could back out of your deal if their offers is condition on them getting a loan at certain rate. So, it’s critical for you to investigate the terms of these offers.
- Escrow Close Date: If you need the proceeds of your sale to make other investments, then this could be one of the most critical selection criteria among the offers. We also use this as a guide to determine fake cash offers specially when they require 30 days to close.
- Deposit Amount: Any serious buyer should put at least 3% of their offer price as their initial deposit. Some buyers use their deposit amount as a proof of their serious intent to purchase a home. In fact, we have written offers with investors where they place a $1M deposit along with proof of funds. The deposit check should be written in the name of your Title company and you should not hold it yourself since there are laws to hold these checks in escrow accounts. You should not deposit the check into your personal account if the check has been written in your name.
Once you have selected the best offer that you know it will close, you will need to monitor the escrow activity to make sure contingencies, inspection and other tasks are being performed on time by your buyer.
Negotiating a real estate transaction is the combination of science and art. The science part. According to National Association of Realtors, 28% of the homes sold by their owners were under-price which means as owners you might be starting your negotiations at a huge discount.
Finally, challenges to selling your own home are not insurmountable, but it requires serious planning and education on your part. But don’t feel you are alone in this venture and you can take advantage of our 1% listing program if your home is in Los Gatos.