Selecting an offer on your home isn’t always straightforward. While simply taking the highest price offer sounds like a good idea on the surface, it can be a huge mistake. Just because someone signs a contract, does not mean they will actually close on the deal.
If you want your deal to go through the first time, you need to make sure the terms of the contract, not just price, are solid. Below are some common terms and o
There are many different types of financing; conventional, FHA, VA, USDA, and our favorite, cash. Our preference, if we are faced with multiple offers and all other terms are the same, is cash, conventional, VA, FHA, and USDA in that order. With complex loan programs such as USDA, there are more boxes to check and more chances for things to fall through. Additionally these loan programs can add weeks to the closing time frame since they take so long to go through underwriting.
Keep in mind that for someone to get a mortgage, the house has to appraise. If the house does not appraise, then the buyer will have to pay more money as a down payment. This is a huge problem particularly with FHA and USDA buyers in our experience. Many first time home buyers will submit over asking price offers knowing the home will not appraise. You as the seller will typically need to drop the price down to the appraised price.
A normal inspection period for us in 7 days max! The less the better. The point is to provide enough time for the buyer to bring through a licensed inspector and have a reasonable amount of time to review the results. If your buyer is asking for 2 weeks, you need to ask why. Buyers who need long inspection periods can be flaky and often use that long inspection period as a way to lock your house up while checking the market for a better deal.
Closing Time Frame
As mentioned earlier, government-backed loan programs take longer to close than cash, conventional, or private. A standard closing can be 30 days or it can be 45 days for some loans. If your buyer wants 50-60 days, this is unreasonable and you need to figure out why.
Many buyers do not have enough money to close. They may need $12,000 in down payment and closing costs but only have $6,000 in savings. These buyers will typically request that the seller contribute $6,000 towards the buyer’s closing costs. Keep in mind, that this would come out of your proceeds at closing and these buyers are usually a little less reliable.
Earnest money deposit
The last topic here is the earnest money deposit. The standard is $1,000, but we always ask for more. If the house costs $500,000, this should be more in the $10,000 range. For a $200,000 house, we usually want at least $2,000. If a buyer is not willing to increase the earnest money deposit, it is possible they do not have much in savings or are not fully sold on the house. Either way, it is a bad sign.
When you are ready to sell your home, choose an agent who has been there before and has a plan to navigate the tough stuff. Choose a J&J Realtor and experience something better. Call us today or fill out the form here to get in touch.
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