We Received an Offer on Our Home!

Today, we are in Month 7 of our series on “12 Months To Sell Your Home.”

Once your home goes live on the market, you can expect to receive offers.  We have already discussed the importance of preparing your home for showings and pricing it close to market value to obtain the greatest interest from buyers.

Today, we are going to discuss the offer itself, negotiation tactics, counteroffers, and contingencies.

The Offer – When you receive an RPA (residential purchase agreement), it is emailed to your listing agent and then they will email it to you and go over it with you in person or on the phone.

The main components of an offer are the purchase price, days until close of escrow, when offer expires, initial deposit amount or “earnest money deposit,” loan amount if not a cash offer, and the balance owed. 

The purchase price is the price the buyer is offering, days to close of escrow is the time the buyer is saying they can complete inspections, appraisal, and have the loan funded or have cash on hand.  The seller will receive the proceeds from the sale 1-2 days after escrow closes.   

It is important to respond quickly to the offer, because it typically expires in 3 days, which gives you enough time to go over it.  The earnest money deposit is an initial deposit that conveys to the seller how serious the buyer is about purchasing their home.  It is typically in the amount of 1-3% of the purchase price.  

Negotiation tactics – I always tell the buyer’s agent that we are looking for a clean offer.  A clean offer in my opinion is a reasonable offer price, without a lot of concessions, credits, and unreasonable contingencies, and one that can close quickly.   Your agent will go over the offers with you and talk about the points to negotiate if any. 

Counteroffers – In the event that you feel that the offer price is too low or the credits and contingencies are unreasonable, then your agent will send back a counteroffer in an effort to work with the buyer to come to an agreement.

Contingencies –Reasonable contingencies are things like home inspection, pest inspection, roof inspection, mold inspection, appraisal, and loan.  If it’s a cash offer, then the appraisal and loan contingencies are irrelevant, but if not, then the home must appraise for the amount offered or more to prevent an appraisal gap that either the buyer or seller will have to cover.  An unreasonable contingency would be like the buyer researching where the waterways will be when they hook up to the local irrigation district who told them that they had access to irrigation water.  This process could take up to a year which is why it shouldn’t be a contingency in the offer.  The buyer has 17 days to decide whether or not the contingencies they have put in place meet their approval.  If the home inspection doesn’t pass their approval, they have the option to back out of the transaction or move forward with a request for repairs from the seller or take it on themselves.

I hope you found this information valuable and if you need anything real estate related, don’t hesitate to reach out.  I am here for you when you’re ready to make a move!