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Evaluate an Offer
Consider the following points when you receive an offer from a potential buyer:
Read beyond the fine print.
Purchase price isn't everything. Carefully consider the purchase contract's
other terms and conditions. Too many contingencies can leave loopholes and
cause a deal to collapse. Especially avoid contingencies that favor the buyer,
such as linking the escrow closing date to the buyer's sale of their current
home. If the buyer insists on such terms, include a so-called kick-out clause
in the contract that will allow you to consider other offers if the buyer is
not able to sell within a certain time period.
Assess your buyer's financial qualifications.
Is the buyer pre-approved? How much of a loan is the buyer seeking? Unless
you're in an active market, lenders tend to shy away from underwriting a deal
in which the purchase price is higher than the nearest comparable sale and the
buyer is putting less than 10 percent down. If this is the case, your buyer may
not be able to obtain financing, resulting in lost sale time.
If you don't want to completely reject the offer, ask to extend the time you
have to respond, or signal your concern about financing. This will encourage
the buyer to acquire more funds or give you time to consider another offer.
Know the market.
How you judge an offer also can depend on market conditions. If the market is
slow a buyer's market, you may feel vulnerable, especially if circumstances are
pressing you to sell. Make sure any offer you accept doesn't keep you in escrow
longer than 30 days. In a fast market a seller's market where multiple offers
are likely, be wary of countering more than one offer at a time (you could end
up in legal trouble if two buyers both accept your counteroffer). Also be wary
of offers that promise more money but contain poor contract terms (long escrow,
multiple contingencies). In a fast market, it's wise to wait for the best
offer.
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