How To Deal With Offers When Selling Your Home
How To Deal With Offers When Selling Your Home
When selling a home the ultimate goal is to get an offer from a buyer that meets all the requirements of the homeowner. Depending on the market type, whether a seller’s market or a buyer’s market, the offers may not be at the asking price. Homeowners have a number of options for dealing with offers when they come in and this article explores in depth what homeowners can do when they do receive one or more offers on their home for sale.
How Will Offers Be Presented?
In order to be legal and enforceable in court all offers for real estate must be presented in writing. Most states consider electronic versions of the forms to be considered “in writing” and even the digital signatures that go along with the electronic forms are acceptable. The buyer can present verbal offers to the seller and the seller can even accept a verbal offer verbally, but until written down the offer and acceptance is not valid. A court of law would not find an enforceable contract where there is only verbal offer and acceptance. So the best bet is to make sure there is a written contract that covers the terms of a verbal offer.
Sometimes buyers just want to test out the waters and see if the sellers would be willing to accept an amount offered verbally. They may send an email or have their agent send an email or make a phone call to see if the seller would take a certain amount to sell their house. Even if the seller states yes they would, until the offer is reduced to writing with signatures on the offer documents it will not be valid as noted above. Email, text messages, social media messages and similar means of communications would not be considered a binding contract on any of the parties.
What Will Offers To The Sellers State?
All offers must contain the amount they are offering to the homeowner as a minimum. Often times in addition to the amount the offer will provide if earnest money will be paid; when the closing date will be; is the buyer conditioning the offer on appraisal, inspections, financing; is the buyer asking for the seller to pay closing costs; and more. A detailed offer should be a rather long document containing many of the terms and conditions of the purchase that protect both the buyer and the seller. There may be state approved residential real estate purchase contracts available at your state government’s website. Additional state law required forms may be presented along with the offer like agency disclosure if a real estate agent is representing one or more of the parties, property condition disclosure form, lead disclosure form and more. It is best to use purchase offer forms that are designed for your state as opposed to generic forms that may miss certain key legal language and thus make part or all of the offer unenforceable.
Offers to purchase a home usually contain expiration times so that the offer is not available too long for the seller to consider. Allowing offers to remain open too long potentially allow the seller to seek other offers from buyers or just to sit and wait in hopes more showings are scheduled with possibility of more offers coming in and beating the current offer. While a buyer can cancel an offer at any time through written communication, there is always the possibility that the cancellation notice is delayed or not received and the seller has accepted without knowing about the cancellation. In those situations a court would need to settle the matter if both the buyer and seller cannot agree that there is an existing offer or not.
A seller can accept or reject any offer for any reason and does not have to accept the first offer as presented or accept an offer that offers the price the seller is advertising their home for. Sellers are allowed to accept any offer that works for them and they see as the best offer even if the offer amount is lower than on other offers. A home seller may prefer to accept a lower all cash deal since the financing condition and appraisal condition of the offer may not be present as compared to a higher offer that is conditioned on the buyer getting financing and the house meeting appraisal.
Now if a seller were to reject a full price offer on their home they may owe a commission to their real estate agent since often times the agreement between the real estate agent and the home seller states the agent is entitled to a commission when they are able to bring a buyer who is ready willing and able to make an offer on the home at its current price. Usually the terms of the listing agreement do not require that the offer has to be accepted by the seller, but the offer must simply be made to the seller. Whether or not the agent and their broker will decide to pursue a commission when a seller rejects a full price offer is for the broker to decide.
Buyer’s will usually prepare their offer by either offering the asking price, offering more than the asking price or less than the asking price. In a seller’s market it is not uncommon for homebuyers to offer more than the asking price in order to make sure they are the one to buy the home. Where a home may have some issue, been overpriced, or due to poor marketing has sat on the market for longer than normal the buyer may offer below the asking price and sometimes quite below the asking price. When a home has spent more days on market than is average the home is presumed to have some sort of problem with it and as a result usually the only ones interested in it are bargain hunters or deep discount cash investors.
If the home is subject to a homeowners association or HOA then review of the HOA documents may also be part of the conditions when making an offer. With the inspection clause the homebuyer wants time to inspect the condition of the home. If the condition does not meet the homebuyers needs then they can either cancel the purchase offer or attempt to negotiate repairs or a price reduction.
The appraisal clause and financing clauses are generally present when the homebuyer is using a mortgage to purchase a home. Under the appraisal clause the home’s value (as determined by an appraiser) must meet or exceed the price that the buyer is agreeing to pay the buyer. If the home value does not meet or exceed the purchase price then the seller can reduce the price to meet this condition, the buyer can bring more cash to closing or the deal can be cancelled. With the financing clause the homebuyer must meet all requirements from the lender so that they qualify for the loan. That means the homebuyer must provide all needed documents to the mortgage company and not take on any unnecessary loans, change jobs or apply for too many credit cards. If the buyer is denied a loan because of some financing issue the offer to purchase the house would be cancelled unless the buyer can pay for the home with cash or secure financing with another lender.
How Do Sellers Respond To Offers?
As with making an offer a response to accept, reject or counter an offer also needs to be signed and in writing. While a seller can provide verbal responses through emails or text messages those responses will not be legally binding unless in written format and signed by the seller. If the seller accepts the buyer’s offer with no changes then a contract is created for which the seller and buyer have to meet the conditions in the contract in order for the home sale to close.
If a seller counters the buyer’s offer then that in effect cancels the buyer’s original offer and the seller’s counter offer is treated as a brand new offer. As a result the seller cannot go back and accept the buyer’s original offer unless the buyer agreed to re-open the offer for the seller’s consideration. The buyer is free to accept the seller’s counter offer, they can reject the offer, or offer another counter offer.
Seller’s can reject an offer by communicating rejection of the offer in writing. No explanation is required to be given with any rejection although it is helpful to offer an explanation so that if a buyer is still interested they may be able to revise their next offer to better meet what the seller is seeking. If a seller lets an offer expire by not responding within the time frame specified in the buyer’s offer then that is treated as a rejection of the offer and the seller cannot accept the offer after expiration unless the buyer re-opens the offer.
With one of the main goals of putting a house on the market for sale being getting an offer, it is helpful for home sellers to understand how the offer process works. In order to be legally binding all contracts to purchase real estate must be in writing and signed by the seller and the buyer. Real estate offers often contain many conditions that must be met before the sale on the home can close.
- Learn About Real Estate Appraisals When Selling A Home by Bill Gassett
- Real Estate Contingencies 101 by Joe Boylan
- Things That Can Kill Financing For Buying A Home by Kevin Vitali
- Real Estate Offers at Realtor.com
About the author: The above article “How To Deal With Offers When Selling Your Home” was provided by Luxury Real Estate Specialist Paul Sian. Paul can be reached at paul@CinciNKYRealEstate.com or by phone at 513-560-8002. If you’re thinking of selling or buying your investment or commercial business property I would love to share my marketing knowledge and expertise to help you. Contact me today!
I work in the following Greater Cincinnati, OH and Northern KY areas: Alexandria, Amberly, Amelia, Anderson Township, Cincinnati, Batavia, Blue Ash, Covington, Edgewood, Florence, Fort Mitchell, Fort Thomas, Hebron, Hyde Park, Indian Hill, Kenwood, Madeira, Mariemont, Milford, Montgomery, Mt. Washington, Newport, Newtown, Norwood, Taylor Mill, Terrace Park, Union Township, and Villa Hills.