Multiple Offers
Central Texas has been in a Sellers Market for some time now. Having said that many times when a home is put on the market it receives multiple offers. That happens when the demand is high and more than one buyer competing to make an offer on the same property. In a multiple offer situation the potential buyer has to be more aggressive. Typically the Listing Agent will contact all of the Buyers Agents and advise them of the multiple offer situation. The will advise them to make their Highest and Best offer which also includes their best terms by a certain date and time. The Listing Agent will present any and all offers to the Seller and may accept one of the offers, negotiate with one or more of the offers or will reject all offers. In any case the highest may not always be the best offer. So what are some tips to get your offer accepted.
More Earnest Money
One consideration would be for the interested buyer to increase the amount of Ernest Money. This is money held by the Title Company and represents the buyer's good faith to purchase a home. Typically Earnest Money is 1% of the sales price and is applied to the Buyers closing costs.
Contingency's
Most real estate transactions have contingencies. These are provisions that must be met for the transaction to be completed. A contract with fewer contingencies will most likely close in a timely fashion. A few of these contingencies are
Home Inspection Contingency Home Inspections which gives the buyer a right to have the home inspected by a Licensed Home Inspector by a certain date called the Option Period. During this option period the buyer has the right to negotiate repairs of defects, safety issues or code violations.
Appraisal Contingency Except for a cash buyer and appraisal is usually ordered within 14 days of the home going under contract and is required by the buyers lender. They will order a neutral third party appraisal by a Licensed Appraiser. This appraiser will verify the home value is enough to cover the amount of the mortgage. If the purchase price is below the appraisal value the buyer can renegotiate the sales price or some loans allow the buyer can make up the difference in value at closing.
Financing Contingency The financing contingency protects the buyer in the event the lender doesn't approve the mortgage.
Buyer's Sale of a Home Contingency Many times a buyer will have to sell a home before purchasing another. This contingency puts the seller in a disadvantage if the buyers home doesn't sell.
Title Contingency Before the lender approves the mortgage the lender will require the home to have a "clear title". A process done by the title company that checks for any potential easements, the home is free from any ownership claims over liens, fraudulent claims from a previous owner or clerical documents filed at the courthouse.
*** Many of these contingencies are typical for most real estate contracts for the exception of the Buyer's Sale of a Home contingency. Contingences can be negotiated***
Down Payment
Depending on the type of mortgage the buyer must make a down payment on the home. Sometimes a larger down payment can strengthen the offer. But in most cases the buyer's down payment amount is related to the type of home loan. The main concern to the seller is that the transaction closes and for that to happen the buyer's mortgage has to be approved.
All Cash Offer
I am sure you have heard the expression " Cash is King". That is true in real estate. An all cash-cash offer is ideal for both parties. The buyer doesn't have to be concerned with an appraisal or with financing. A sales contract with fewer contingencies means less ways the deal can fall through.
Closing Date
The closing date is when both parties sign the final paperwork making the sale final. Depending on both parties situations they may want the closing to be quick or slow. This is something the Buyers and Seller Agent will discuss and come to a mutual agreement.
Making a Counter Offer
Depening on the circumstances you may want to keep the current offer or be more aggressive and give in to the buyer's demands. Each transaction is has it's own unique circumstances. You agent can provide helpful insight about how to move forward.
For example in a Seller's Market your agent may recommend countering with a higher offer than in a Sellers Market. For more information about multiple offers contact Allen Deaver of Asset Realty today.
