As a seller, one of the most exciting things you can hear is that someone has made an offer on your house. This is especially true if you’ve been on the market for several months without a lot of interest. But once you’ve finished letting out that sigh of relief or jumping up and down, it’s time to actually take a look at the offer.
Your agent will most likely want to meet in person to discuss the offer because there’s actually much more to it than the amount. In fact, while the amount of the offer should certainly factor into your decision of accepting or rejecting it, there are other aspects of the offer that can make or break the deal. In fact, it’s actually possible someone could offer you full price for your home that, after all the contingencies and concessions are factored in, actually nets you less than you’d get if you took an offer that was under your asking price but had fewer conditions.
First, take a look at the earnest money deposit. This shows you how serious the buyer is. Sometimes, buyers will offer a larger deposit if they think you might see them as a weak buyer—someone who’s not pre-approved for financing, for example. Usually, the deposit is held by a third party. If the buy goes through, the deposit is applied to the final selling price. If it doesn’t, the buyer gets it back. Take this number as a sign of how much the buyer wants the house.
Next you’ll come to the contingencies. The first you’ll usually find is a mortgage contingency. This lays out the type of mortgage the buyer is trying to get, including their rate and term. If this doesn’t look realistic, the buyer may not be able to secure financing. This section should also state how long the buyer has to secure their loan. Your property could be tied up for months if this time limit isn’t set.
Seller concessions are another major factor for you to consider. This can include anything from the seller paying the closing costs to removing some landscaping to even paying for a brand new roof. If it’s a seller’s market, buyers won’t ask for very many concessions because they know they have a lot of competition, but if it’s a buyer’s market, expect them to ask for a few things.
These are just a few of the major parts of an offer. You’ll also see inspection and appraisal contingencies, personal property requests, and other contingencies that you need to carefully read over and weigh before you make your final decision.