The first two quarters of the year brought a very heated home market. It was and is a seller's market, meaning that due to lack of inventory and high demand from buyers, the seller has more leverage during negotiations. As a home seller it's important to identify goals for the home sale. For some it's the bottom line. For others it may be more important to remain in the home for a set period of time after closing of escrow. Having a clear understanding of this will be very helpful when faced with decisions during the negotiation process—especially when there are multiple buyers competing for the home and there is pressure to make a decision.
Considerations for sellers when reviewing offers:
Financing TermsThe saying "cash is king" is still relevant today. It's appealing to receive a cash offer with a quick escrow period, but this convenience can often be used as leverage by the buyer to obtain a lower sale price. This type of offer usually involves less risk and a short escrow period, as cash eliminates waiting for a buyer's full mortgage approval. Financed mortgages can close in 30 to 45 days, which is not much longer to wait, especially for higher sales prices.
Closing TimelineTo make this already stressful transaction a little easier, it's important to get the closing timeline that is needed. Vacant homes may be ready to be sold and moved into ASAP; others may be occupied and need time after closing to pack up and move. It's common for buyers to be flexible and to allow a short time after closing for the sellers to move comfortably. In some instances a buyer may allow the seller to remain in place for an extended time with compensation or "renting back."
Less is MoreThis saying is definitely true when it comes to contingencies in an offer. The appraisal contingency could result in the seller and buyer having to negotiate a new sale price or the buyer coming up with more down payment if there is a shortfall of appraised value and agreed offer price. With the home inspection contingency, where the buyer will normally have 10 business days to have the home professionally inspected and determine whether any issues are found, a buyer can ask for repairs to be made prior to closing. Some buyers will have a home sale contingency, meaning part or all of the funds needed for closing will be coming from the successful sale of their current home. Sometimes, to compensate for more contingencies, a buyer will offer a higher sale price, but it will be important to balance sales price versus the risk of assuming these contingencies.
One consistency with home sales: there is usually compromise. Being ready to navigate these areas will help get to mutually acceptable negotiations. Sellers do have the upper hand currently, but they also need to be reminded that working together with the buyer will be beneficial in achieving their goals.