What to consider when getting a home offer?
Metro Detroit home selling tips
So you received an offer on your Metro Detroit home, what should you be looking for? Of course you have the amount you want in your head, but there are many other items you should be looking at. Let's look at these important factors on the purchase agreement.
- Amount offered
- Date of closing
- Occupancy date
- Sellers Concessions
- Type of mortgage
- Home warranty
- Other items wanted
- Inspection & time frame
1.) How does the amount offered compare with what you want to walk away with. You need to calculate your net proceeds. When an offer comes in, you can accept it exactly as it stands, refuse it (seldom a useful response), or make a counter-offer to the buyers, with the changes you want. In evaluating a purchase offer, you should estimate the amount of cash you'll walk away with when the transaction is complete.
For example, when you're presented with two offers at once, you may discover you're better off accepting the one with the lower sale price, if the other asks you to pay points to the buyer's lending institution.
Once you have a specific proposal before you, calculating net proceeds becomes simple. From the proposed purchase price you can subtract:
* Payoff amount on present mortgage;
* Any other liens (equity loan, judgments);
* Broker's commission;
* Legal costs of selling (attorney, escrow agent);
* Transfer taxes;
* Unpaid property taxes and water bills;
* If required by the contract: cost of survey, termite inspection, sellers concessions, buyer's closing costs, repairs, etc.
2.) Date of closing. Is the date of closing acceptable to you? In 2013 mortgages are taking about 45 days to close. Anything longer may be negotiated.
3.) Occupancy Date. Does the buyer want to move in on the day of closing. Are you comfortable with moving out with the house not closed. If you are not then ask for a few days of occupancy. If you need more days it is common Metro Detroit real estate custom to pay for the new buyers mortgages, taxes, and insurance each day you are there. It is the only fair way for you to rent your Metro Detroit home back from the buyer.
4.) Sellers Concessions. Sellers concessions are basically the buyers closing costs that you help pay. You may feel some of these costs are none of your business, but many buyers, particularly first-timers, are short of cash. Helping them with closing cost may be the only way they can buy a home. The key is what is your net amount you will walk away with. It may be the best way to get your home sold.
5.) Type of mortgage. The way the buyers pay for your home does matter to you. Cash is best because there is no underwriter or bank to kill the deal. There is no appraisal and the time to close is usually shorter. Conventional mortgage is the next best type of mortgage to consider. Then FHA and then last is VA. Simple because FHA mortgagees may have border line credit and the deal may fall apart. VA mortgages take longer and the appraisal process is tougher. You may have more items to repair with a VA mortgage.
6.) Home Warranty. Does the buyer want a home mortgage and who is paying for it?
7.) Other items wanted. Does the buyer want furniture, appliances, or your hot tub?
8.) Home inspection. Does the buyer want a home inspection? How long is the inspection and time to respond period?
Counteroffers
When you receive a purchase offer from a would-be buyer, remember that unless you accept it exactly as it stands, unconditionally, the buyer will be free to walk away. Any change you make in a counter-offer puts you at risk of losing that chance to sell your Metro Detroit home.
Who pays for what items is often determined by local custom. You can, however, arrive at any agreement you and the buyers want about who pays for:
* Termite inspection;
* Survey;
* Buyer's closing costs;
* Points to the buyer's lender;
* Buyer's broker;
* Repairs required by the lender; and
* Home Protection Policy.
Your present mortgage lender may maintain an escrow account into which you deposit money to be used for property tax bills and homeowners insurance premiums. In that case, remember that you will receive a refund of money left in that account, which will add to your proceeds.
These are the major items you should be looking at when you get a purchase offer on your Metro Detroit home.
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