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-Bloggged 8 times:

Re-Blogged By Re-Blogged At
  1. Jeffrey DiMuria 321.223.6253 www.SouthBrevardBeachHomes.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
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Topic:
Home Selling
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Realtors®
WEEK IN REVIEW
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evaluating an offer

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Ambassador
1,228,922
Erica Ramus
MRE, Schuylkill County PA Real Estate
Erica Ramus - Ramus Realty Group - Pottsville, PA

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.

April 09, 2011 12:20 PM
Rainer
157,536
Anthony Daniels
SF Bay Area REO Specialist
Coldwell Banker

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.

April 09, 2011 01:14 PM
Ambassador
767,711
Robert & Lisa Hammerstein
Bergen County NJ Real Estate
Keller Williams Valley Realty

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...

April 09, 2011 01:19 PM
Rainer
89,047
Robert Schmalz
Cal. Lic Broker
West Los Angeles Real Estate Group

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.

April 09, 2011 01:30 PM
Rainmaker
373,063
Morris Massre
Realtor Broward County Florida
Berkshire Hathaway Home Services

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

April 09, 2011 02:34 PM
Rainmaker
1,077,882
Bill Burchard
Broker, Realtor - Murrieta Homes For Sale, Califor
3B Realty: 951-347-3818, CA

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

April 09, 2011 04:26 PM
Rainmaker
1,325,764
Vickie Nagy
Broker for San Ramon, Danville, Dublin, Pleasanton
Vickie Nagy, Broker Associate Realty ONE Group BMC Associates | BRE#01363932

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

April 09, 2011 04:35 PM
Rainer
239,373
Justin Dibbs
REALTOR® - Ashburn Virginia Homes for Sale
United Real Estate

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.

April 09, 2011 05:39 PM
Rainmaker
647,632
Realty Works Temecula
Real Estate, Temecula, Murrieta, Menifee
Realty Works Temecula

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

April 09, 2011 06:26 PM
Rainmaker
506,595
Patricia Aulson
Realtor - Portsmouth NH Homes-Hampton NH Homes
BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate

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

 

Patricia/Seacoast NH & ME

April 09, 2011 09:16 PM
Rainmaker
1,389,427
Tom Braatz
Waukesha County Realtor Real Estate agent,Waukesha
Re/Max Realty Center 262-377-1459

Pat

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

April 09, 2011 09:52 PM
Rainmaker
973,701
Sharon Alters
Your Fleming Island Relocation Agents.
Coldwell Banker Vanguard Realty

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

April 09, 2011 09:53 PM
Ambassador
1,161,878
Tammie White
TW Realty Group, Franklin TN, South of Nashville
Benchmark Realty, LLC (615) 495-0752 or www.TWRealtyGroup.net

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

April 10, 2011 12:18 AM
Ambassador
1,550,726
Christine Donovan
Broker/Attorney 800-610-7253 DRE01267479 - Costa M
Donovan Blatt Realty

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

April 10, 2011 12:38 AM
Rainmaker
180,945
Randy Harden
www.RERandy.com
Wieder Realty, Inc.

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.

April 10, 2011 09:08 AM
Ambassador
390,928
Mimi Foster
Realtor - Colorado Springs
Managing Broker EPIC Real Estate Group

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.

April 10, 2011 10:13 AM
Ambassador
1,879,028
Chris Ann Cleland
Associate Broker, Northern VA
Long & Foster REALTORS®, Gainesville, 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?

April 10, 2011 01:34 PM
Rainmaker
390,208
Tni LeBlanc
JD, MA, REALTOR, CalBRE # 01871795
Mint Properties, Tni LeBlanc (805) 878-9879

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!

April 10, 2011 01:48 PM
Rainer
52,347
Joyce Herr
Lancaster County & Beyond
Prudential Lancaster Real Estate

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

April 11, 2011 12:12 PM
Rainmaker
1,326,570
Charles Stallions
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.
Charles Stallions Real Estate Services

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

March 31, 2012 09:14 AM
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Patricia Kennedy

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