Flipping the calendar to 2018 brought a surprisingly quick start to the home buying and selling season here in frosty/not frosty/frosty again Minnesota. Homes are being listed and brought under contract quickly – and across all demographics – which once again demonstrates a strong appetite on the part of home buyers. As you stare out the window waiting for the car to warm up and maybe ponder a sale of your home – to feed the growing mass of home buyers searching in vain for a roof to put over their head – here are a couple of important steps for home sellers to consider.
Offer Price and the Bottom Line – I approach the home seller enthusiastically, a smile on my face as I prepare to present them with the opening salvo in the negotiations. I prefer structure and order, so I start at the top of the purchase agreement…the seller wants to know one thing: “HOW MUCH?!”. If the number on line 35 of the Minnesota standard purchase agreement is close enough to their asking price, I might get a smile. Then we start counting backwards….every home seller should have a copy of the a net sheet in their possession – taking a sale price and subtracting any outstanding mortgage, property taxes, commissions, and other closing expense. The bottom line number on that sheet is the most relevant figure as it gives you the best estimate of the funds you’ll have burning a hole in your pocket as you walk away from the closing table.
Earnest Money – High on the list is the pledged amount that accompanies the offer. Whether it’s called a deposit or earnest money, this serves to instill confidence that when you are evaluating the offer you know that it’s backed up with more than wishful thinking. If the amount is greater than the customary minimum (generally 1% of the sale price), it’s a signal that the would-be buyer is more than just a little serious about completing the transaction. It’s still in the best interest of the seller that they demonstrate their financial ability to deliver on the deal (along with a pre-approval letter from a qualified, reliable, and locally based lender). Important to note, earnest money doesn’t necessarily constitute a guarantee of a sale. There are a number of ways a buyer can cancel a transaction and retain their deposit – your agent should make these clear to you, one of which is the…..
Inspection provision – Almost every serious offer will be contingent on the property passing a thorough inspection—but this is a risk element that’s largely controllable by the seller. It’s the reason some Saint Paul sellers get ahead of the game by investing in their own inspection before listing. Twelfth-hour discoveries of issues that could have been fixed beforehand can throw a big bucket of cold water on a transaction that had been proceeding smoothly. If a condition has been properly disclosed in advance, evaluating an offer will include verifying acknowledgment of disclosures and which steps are necessary to get a deal done!
Everything else – An offer may have any number of other provisions, so properly evaluating an offer means carefully weighing the practical impact each may have. The timing elements can be crucial. Stretching out the closing date can be inconvenient and add a degree of uncertainty. Pushing for a quick closing may create an interim “no-place-to-live” situation and that can be awkward and expensive! An offer that is contingent on the sale of the buyer’s home adds a degree of uncertainty that needs to be evaluated with knowledge of that area’s specifics. Lastly, your buyer’s lender will want to appraise the home to ensure they (and you) are getting what they (and you) are paying for. Successfully traverse the field with all of these landmines (hopefully your agent is walking alongside you with a map) and you will enjoy the “slide the keys” moment at the closing table!
Success in evaluating an offer for your home—or comparing multiple offers when that thoroughly enjoyable situation occurs—often means a lot more than a simple yes or no decision. Coming up with a strategic counter-offer is often called for—and that’s when there’s no substitute for having an experienced agent by your side to help fashion a strategic win-win counter offer.
To discuss these important steps for home sellers and all the other steps that will result in the successful sale of your property, give me a call to arrange a no-obligation consultation at (651) 251-4898 or email me at firstname.lastname@example.org.