Price Isn't Everything: Evaluating an Offer

By
Real Estate Agent with Evers & Company Real Estate, Inc. AB95346

Price Isn't Everything:  Evaluating an Offer

Just at the point your are totally sick of making the beds and keeping the kitchen pristine, an offer comes in, and you are stoked.  And as you imagine what it's going to look like, you are probably focused on the line in the contract that reads Total Sales Price. 

While that's natural, price is not the most important thing that will be in that offer.  Here are some other things to look for:

  • What type of financing are the buyers planning to use?  If they are putting down at least 20%, that’s better than if they are trying to get in with a mortgage product that might allow for a low down payment.  They are out there, but lenders have very strict guidelines. 
  • How big is their earnest money deposit?  This is a case where size matters.  
  • Are they financially qualified to buy your house?  Have they been preapproved?  
  • Which lender are they using?  Some are good.  Others are problematic, especially when it comes to appraisals and final loan approval.  
  • Did they include an appraisal contingency?  If so, and if the appraisal comes in low, they will have to increase their down payment or ask you to lower the price.  If you don’t, they can walk.   
  • Where is the down payment coming from?  If they are using equity from their current home, is it already under contract?  If so, how strong is that contract?  You will want your agent to have a look at their contract and talk to the other buyers’ lender. 
  • What does their offer say about what happens if the contract on their house falls apart?  Can they settle anyway?
  • Are they asking for a credit at settlement to help them pay their closing costs?  If so, this will reduce your net, and it could have a negative impact on the appraisal. 
  • How long do they want for their home inspection?  Anything over a week is a little excessive.  
  • Are there other contingencies that increase the risk that the transaction won’t work?  Do they need to finalize a new job?  Do they need their parents’ approval?

Keep in mind that if there are things you don't like, you can always counter the buyer's offer.  And as long as they are financially viable buyers, it's better to counter than to just say no.  If the would be buyers are willing, but not ready or able financially to buy your home, that's when you say no.

When your "SOLD" sign goes up, you really do want it to stay up!

If you are planning a move to or from the Washington, DC area, I can help.  Call, email or text me at:

Housepat@mac.com

202-549-5167

Licensed in DC, Virginia and Maryland

 

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Re-Blogged 8 times:

Re-Blogged By Re-Blogged At
  1. Jeffrey DiMuria 321.223.6253 www.SpaceCoastHomesNow.com 04/08/2011 08:45 PM
  2. Lori Cain 04/09/2011 11:33 AM
  3. Erica Ramus 04/09/2011 12:21 PM
  4. Vickie Nagy 04/09/2011 04:34 PM
  5. Cheryl Ritchie 04/09/2011 06:29 PM
  6. Bill Burchard 04/10/2011 10:22 AM
  7. Patricia Aulson 04/12/2011 01:02 PM
  8. Charles Stallions 03/29/2012 06:23 AM
Topic:
Home Selling
Groups:
WEEK IN REVIEW
Realtors®
Tags:
evaluating an offer

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Erica Ramus
Erica Ramus - Ramus Realty Group - Pottsville, PA - Pottsville, PA
MRE, Schuylkill County PA Real Estate

Great post Pat. I am reblogging. Price is important, but so are terms! You can lose a house with a higher priced offer but terms that don't work for the seller.

Apr 09, 2011 12:20 PM #52
Rainer
157,586
Anthony Daniels
Coldwell Banker - San Francisco, CA
SF Bay Area REO Specialist

I agree, price isn't everything.  A properly structured offer can sometimes win based on other, more important factors, especially in a multiple offer situation. 

Few listing agents recognize the subtle strategies employed by shrewd buyer agents.

Good stuff, thanks for sharing it.

Apr 09, 2011 01:14 PM #53
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Robert & Lisa Hammerstein
Keller Williams Valley Realty - Hillsdale, NJ
Bergen County NJ Real Estate

Pat - Another on the spot post... you write such great posts and succinctly illustrate what needs to be said. It's never a good thing to close the door on an offer unless it's all of the points you have listed here. Nice job as always and so sorry we missed you in AC this last Rain Camp...

Apr 09, 2011 01:19 PM #54
Rainmaker
100,746
Robert Schmalz
West Los Angeles Real Estate Group - Santa Monica, CA
Cal. Lic Broker

All good points. When I submit an offer I write a cover page to my seller so he sees it first. I send it before the actual offer. I list all the items that are negatives in the offer and list them one by one and explain what they are looking at . Then at the bottom of the list I will put the price.

Apr 09, 2011 01:30 PM #55
Rainmaker
395,596
Morris Massre
Berkshire Hathaway Home Services - Pembroke Pines, FL
Realtor Broward County Florida

I'm glad you look at it that way because most concentrate soley on price.

Apr 09, 2011 02:34 PM #56
Rainmaker
1,149,737
Bill Burchard
3B Realty: 951-347-3818, CA - Murrieta, CA
Broker, Realtor - Murrieta Homes For Sale, Califor

Good afternoon, Pat. Great advice for home sellers! The devil is in the details, as the saying goes.

Apr 09, 2011 04:26 PM #57
Rainmaker
1,359,819
Vickie Nagy
Vickie Nagy, Broker Associate Realty ONE Group BMC Associates | BRE#01363932 - San Ramon, CA
Broker for San Ramon, Danville, Dublin, Pleasanton

Love this post Patricia, just hit it for a re-blog. Insightful, informative, straightforward. Just doesn't get any better than this!

Apr 09, 2011 04:35 PM #58
Rainer
239,677
Justin Dibbs
United Real Estate - Ashburn, VA
REALTOR® - Ashburn Virginia Homes for Sale

So so true!  There is a lot more to consider in an offer besides the price, though buyers and sellers seem to focus on that one point.

Apr 09, 2011 05:39 PM #59
Rainmaker
658,578
Realty Works Temecula
Realty Works Temecula - Temecula, CA
Real Estate, Temecula, Murrieta, Menifee

Pat a great topic for discussion and especially educating clients!!!

Apr 09, 2011 06:26 PM #60
Rainmaker
518,797
Patricia Aulson
BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate - Exeter, NH
Realtor - Portsmouth NH Homes-Hampton NH Homes

You are right on this Patricia.  It isn't always price.

 

Patricia/Seacoast NH & ME

Apr 09, 2011 09:16 PM #61
Rainmaker
1,468,711
Tom Braatz
Re/Max Realty 100 262-377-1459 - Oconomowoc, WI
Waukesha County Realtor Real Estate agent,Waukesha

Pat

How very true about there being more to an offer than one line.

Apr 09, 2011 09:52 PM #62
Rainmaker
980,983
Sharon Alters
Coldwell Banker Vanguard Realty - Fleming Island, FL
Your Fleming Island Relocation Agents.

Pat, and some lenders can blow the deal when they don't know your state laws and closing costs. Almost happened to us last year, but we saved it.

Sharon

Apr 09, 2011 09:53 PM #63
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Tammie White
Benchmark Realty, LLC (615) 495-0752 or www.TWRealtyGroup.net - Franklin, TN
Franklin TN, South of Nashville

I often find that price may not be the seller's primary concern.

Apr 10, 2011 12:18 AM #64
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Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 800-610-7253 DRE01267479 - Costa M

Pat - This post encompasses so many important things, and both buyers and sellers should read it..

Apr 10, 2011 12:38 AM #65
Rainmaker
180,945
Randy Harden
Wieder Realty, Inc. - Pompano Beach, FL
www.RERandy.com

This is so accurate. I get this from time to time. Someone tells me that they are sending me a great offer at X price and then it turns out that price is contingent on the seller giving back thousands of dollars towards just about everything and then on top of that the mortgage set up is about as flimsy as cheap toilet paper.

Apr 10, 2011 09:08 AM #66
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Mimi Foster
EPIC Real Estate Group - Colorado Springs, CO
Voted Colorado Springs Best Realtor

My husband and I used to restore a lot of homes - Victorians.  Lots of heart involvement (I know, I know).  But a lot of times it wasn't just about the price or the terms.  So often when we would put these beauties back on the market we would get several offers.  And several times we accepted offers that weren't the highest, but the ones where the Buyer had a true excitement to own an older home, and not just someone who was looking for a place to live.  But all of your points were right-on and definitely informative for a Seller.  Good post.

Apr 10, 2011 10:13 AM #67
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Chris Ann Cleland
Long & Foster REALTORS®, Manassas, VA - Bristow, VA
Associate Broker, Northern VA

In the world of Short Sale Listings, you can tell a Buyer is serious when they opt to deposit a sizable EMD at ratification, instead of at short sale approval, which for some odd reason, was something brokerages like Long & Foster offered as an option in their short sale addendums.  Does anything say I'm not serious about your home like NOT depositing the EMD?

Apr 10, 2011 01:34 PM #68
Rainmaker
393,828
Tni LeBlanc
Mint Properties, Tni LeBlanc (805) 878-9879 - Santa Maria, CA
JD, MA, REALTOR, CalBRE # 01871795

Congrats on the feature Pat.  This is a great post.  There are so many other things to consider when you receive an offer especially a short sale offer.  Most importantly you need a buyer that will wait for the home!

Apr 10, 2011 01:48 PM #69
Rainer
52,347
Joyce Herr
Prudential Lancaster Real Estate - Lancaster, PA
Lancaster County & Beyond

I think you covered the contingencies involved in reviewing and offer in all of its aspects. Great job.

Apr 11, 2011 12:12 PM #70
Rainmaker
1,422,221
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.

So true and a very enlightening post, full price and a ton of repairs or extras does not make one happy

Mar 31, 2012 09:14 AM #71
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