FOR SALE BY OWNER GUIDE  
   
Written by Susan Wilcox

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EVALUATING OFFERS
Getting an offer is an exciting moment. Gone is the question of whether it will sell, now it's time to look at the terms.

Offers are not created equal. The best offer is one that yields the price you want with the best chance of closing; that is, the property transfer being completed.

Let's say you have several offers that are very close in price. How do you determine which offer is the best?

This is an area in which you may want to involve your attorney, but here are some things to consider:

• The buyers' ability to purchase the home - The most common reason for a sale to get derailed before closing is the buyer's inability to pay for the home. The buyer's offer will include such details as down payment and type of loan they expect to get. You are well within your rights, before accepting an offer, to ask the buyer for a preapproval letter from their mortgage lender and a "verification of deposit" from the bank or credit union that has their down payment to prove that they have the means to purchase the property. This is so important that a savvy buyer or real estate agent will often include this as part of their offer.

Some loans are easier to get than others. A buyer with great credit who is putting 20% down is almost sure to get a loan; a buyer with credit issues going for a 100% loan has a higher likelihood of difficulties. It's not to say the latter won't get financing, only that it is not as certain.

• The amount of "earnest money" - This is money the buyer gives you as an indication of their seriousness in purchasing your property. This money can be held by you, the seller, but it is recommended the it be held by a neutral third party such as a title company. Many title companies will provide this service at no charge if you agree to use them to handle your closing. Click here for a list of title companies that provide this service. The deposit is nonrefundable if the buyer backs out of the deal for reasons other than those listed in the purchase agreement as 'contingencies'. Some common reasons are failure to get financing or problems with the property's condition. It is usually around 1% of the sales price; but can be as much or as little as you are comfortable with.

• Seller-paid closing costs - Sometimes a buyer won't have enough cash to cover closing costs and may ask the seller to do so. If the buyer is getting an FHA loan, there are some closing costs that must be paid by the seller. This is not a bad thing in itself, and is sometimes is the key to making a deal work, but you will want to do the math. A higher offer that includes seller-paid closing costs might bring you more money than a lower offer that doesn't ask for this.

• Contingencies - Does the buyer want you to replace the carpet at your own expense? Buy a new roof? Leave the spa you were planning to take with you? Again, do the math and don't forget to consider the time and hassle of fulfilling the request. Or maybe the buyer wants to close in 90 days instead of 30 for some reason, or make the sale contingent on the sale of his current home. Is this something you are willing to consider?

Of course, you don't have to accept any offer as written. You are free to make a "counter-offer" with better terms or a higher price. This is Negotiations 101; your attorney can provide you with advice as well as the proper forms and procedures.

Once you have an offer you like, you should complete a purchase agreement and provide the buyer with a ‘Sellers Disclosure’ detailing the condition of your home before you accept it. You must also provide your buyer with a federally-mandated lead-based paint disclosure and booklet. You can find all of these forms here.

The sellers disclosure informs the buyer of your home's condition so that they know what they are buying. If something surfaces in the disclosure that concerns the buyer, they have the right to cancel the purchase agreement within 72 hours. But if you have been honest with your buyer during the sales process, the disclosure won't add much to what they already know



    
     

 


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