How Does A Seller Decide Which Offer To Accept ?

The market has definitely perked up this spring already and we are seeing more multiples offer than before.  With multiple offers on homes it has changed the dynamic of how buyers are and should be submitting offers.  Not every home with multiple offers will result in a bidding war, so I want to take the time and explain give you a quick overview on what factors of your offer will be taken into consideration by the seller.

Financing:

• Cash Deal: This has more than one benefit to the Seller, but normally the offer will be significantly lower than what the list price is because of the simplicity of the deal.  First it can close right after the title has cleared because there is no bank involved.  Second, it is usually in "Sold As Is" which means no work will be done to it.  The buyer is still permitted to do the home inspection but you will be much less likely to have anything repaired or replaced. 

• Conventional Loan: This refers to the terms, there will be a larger down payment with this loan and the appraisal might be a bit easier. Since there will be no PMI included in the mortgage payment it will increase what the buyer can afford by monthly payment.  From a sellers point of view the term itself is better because the buyer is putting down a large amount down of 20%.  

• FHA Loan: This again refers to the terms, with a smaller down payment this is often where we see buyers asking for a "Sellers Concession".  For a buyer with this loan there will be PMI that will need to be accounted for, and the appraisal must be handled carefully so that the loan to value comes in where it is needed to.  

• VA Loan: This is a tough sell for a Seller because the buyer does not have to put any money down.  When I have a buyer who is using a VA Loan I suggest still putting down the same amount as what would be due for an FHA Loan to show the Seller your commitment, and you can receive that money back after closing.  

Additional Financing Terms:

• Sellers Concessions: The easiest way to explain this term is it just like taking a cash advance from the mortgage to have your closing costs included.  There is 2 points of view for a seller with this.  First is if the home is going to appraise for $10,000 - $12,000 more why shouldn't they find a buyer willing to pay that.  Second is that what if the home does not appraise will their buyer still be able to purchase the home, or will the deal go bust! 

• Using Gifted Funds: This is something very common with first time buyers, they will count on "gifted funds" from friends or family.  Buyers must check the guidelines of the bank in which they are using about what amount of money can be gifted, and what information they will want and need from the "gifter".  Many times buyers think it can simply be written as "gifted" and that be it, but each bank works differently you should let your agent speak with your Mortgage Representative to be clear on those terms.  

Conditions: 

• Buyers With Homes To Sell: When a buyer has something they need to sell, it puts the seller at risk.  First the funds from the buyers are more than likely coming from proceeds of their sale.  This means that not only does the seller need  things go smoothly with their home, but they are dependent on an agent who is not working for them to push the other deal through quickly and smoothly.  Secondly, timing with this kind of sale is very important because the buyers will only have about a week window after one home closes to get into the other which puts the sellers in a position where the buyers timeline is much more important than theirs.  

• Buyers With Nothing To Sell: Obviously it is better because the sale is not dependent on any major factors aside from their homes appraisal going smoothly.  It also means that the timeline will have less in the way of deadlines aside from the normal mortgage commitment time which is usually between 30-45 days from contract.  

• Home Inspections: First let me say no matter what the case is, spend the time and money to get a home inspection no matter how many offers are on a property.  It is your way of knowing exactly what your getting yourself into, if you want to move quickly and don't want to spend the money ($500 - $750) at least have a licensed contractor check it out.  Depending on what repairs or replacement you want done, can change the mind of a seller on which offer to take.  If another offer comes in $5000 less they may go with it simply because of what conditions the offer is based on.  

The most important piece of advice I can give anyone who is starting their search is to make sure you have an agent who is working for you.  If the home is aggressively priced they should know it and be able to point you in a direction that will get you an accepted offer the quickest so that you don't lose out.  To see more about how to decide on what to offer, and what the process is look here. 

Sellers On The Move !

I recently wrote  a blog for the buyers to give a breakdown of what you should be doing after your offer is accepted, and what they will need to do.  This blog is directed for what the SELLERS need to begin to do and prepare themselves for.  Most would think that the sellers have the easy part, they just sit back and wait for the closing to be set but I am finding for every educated seller there are more that are not really clear on what they need to be doing.

Just as a buyer has things they need to be doing, you as the homeowner also have things you need to be doing like packing, or finding your new home.  Homeowners who are buying a new home are usually diligent about getting their search underway before their current home is even in contract. I am finding more homeowners that either A. Already have a home and do not require a purchase or B. Homeowners who are opting to become renters are often unsure of when they are supposed to make their move and what will be happening after they have accepted an offer.

Disclosure & Home Inspections 
I did write an entire blog about the home inspection process for sellers, but I wanted to touch base on it again just for a moment.  The two most important rules to home inspection are:

1. DO NOT try and hide or cover-up anything in your home, it will make you look secretive and cause the home inspector to search harder to make sure they didn't miss anything.  Things that you may consider a big deal, may not be to your potential home buyer.  An example of this is lets say you have one leaky faucet, so you decide to shut off the valve completely obviously the home inspector is going to check, and with the valve completely turned off they may think it is more than what it actually is.

2. BE REASONABLE, if one home inspector finds an issue I can guarantee you any other that comes into your home is going to find the same one.  These are trained professionals and although your Realtor will be there to protect you we are by no means experts in home construction.  If there is a safety, or structural issue you can not expect a potential buyer to just take your word that it isn't a big deal, and they can live with it.  If they have gone thru the process of spending money for someone to protect them from buying a home that they will not be able to handle you must respect that.  You do have options, you can ask for a 2nd opinion from a licensed professional who works specifically on that issue (ex: Electrician, Plumber, Roofer) to give an estimate for repair or confirm that the point the inspector made was not one that should have caused so much concern therefor making it a non-issue for the buyer if they are comfortable with that.  If the professional confirms with the inspector that something must be done to rectify the issue you still have options you can either repair it, or credit the buyer so that they can have it repaired prior to moving in.


After you have completed and negotiated through your home inspected, you as the homeowner must make sure that everything you needed to disclose has been done.  If you "forgot" to mention and illegal add-on or that you are taking that dining room chandelier now is your last chance to clear the air.  Everyone is human, and sometimes things will slip your mind when you are signing your listing agreement and answering your agents questions.  Sometimes these things are what can make or break a deal, just because you may see it as not a big deal the only person who can truly tell you if it is important or not is your agent so be sure to be open and honest about these things.  Nothing is worse than having a wrench thrown into a deal that could have been avoided not only does it cause fixing by your agent, it could very well cause you to lose your buyer!


Signing The Formal Sales Agreement
This is not always required but for my clients I always like to have all parties sign the original sales agreement to have it on record.  This agreement does not only include the purchase price and the down payment it also includes your on or about closing date.  It seems to quite often be overlooked but we as Realtors need to begin making a real point of explaining, and than re-explaining what this date means to your homeowner.  The on or about date is 90% of the time what your attorney will put in the contract if you think for any reason you need more time than that date, make sure you inform your Realtor as well as your Attorney.

If the buyer is purchasing another home this date won't just effect you and your buyer, but it effects the buyer of their current home.  The effect of a closing date being drastically changed can cause them to lose their buyer, which puts your deal very much in jeopardy.  Just like a buyer must respect that the home is yours and they can not push you out, you must also respect their time and situation.

When you receive an offer on your home we will tell you if the buyer has anything he/she needs to sell, in the case where the buyer does not we will point out the fact that this is a good buyer because they are not being held back by anything.  This also means though that this buyer is more than likely renting and will need to give notice, which makes that on or about closing date very important.

This is a very important date to your buyer, if they are renting they will be in a position of potentially being homeless if the closing does not happen in a timely fashion of this date.  You may be thinking that no landlord would ever put someone out on the street but it is very much a possibility.  Your buyers can be penalized for overstaying there welcome and that can cost them anything from an additional months rent, to a daily charge which can become costly quickly.

Signing Your Contract
This needs to be done in a timely fashion for 2 reasons.

First is that there are plenty of homes coming onto the market, and what if a better one comes along and your buyer falls in love with it? They are not required to stick with your deal until your contracts are fully signed and if you are dragging your feet than you can not have hard feelings if they move onto the next one.

Second, is because unless you changed your on or about date the clock has begun running towards your closing date.  Your buyers need that contract to put in for their mortgage if you hold off it will take them longer to obtain the mortgage commitment which generally takes 6-8 weeks. You must respect that they need to move just as you do in a tight time frame because there is a lot to be done in that time frame.

Closing
I always keep my homeowners very much informed about the progress their buyers are making towards closing, because in order to be fair to all parties involved communication is key.   Without proper communication things can turn bad, very quickly and make the experience unpleasant for all parties involved, including the Realtors because unfortunately are usually the messengers that will carry your bad news to your buyer.

If you are purchasing another home you should be constantly checking progress on that deal  this way if there is any unexpected delay you are able to communicate this to your realtor who in turn can inform the other agent.  This respect needs to go both ways, if your buyer has hit an unexpected snag they must also communicate this, so that you are fully informed.

Now this may seem silly BUT when you listed your home your agent will have asked you where were you going after your home sold, if you told us you were moving to your 2nd home that is where we think you are going.  If over the course of the listing changed your mind you have to inform us we are not mind readers, and we will find you a rental but only if we know you need one.   Finding a rental for anyone whether it is a 1 bedroom or a 3 bedroom is a task, because not every apartment is available for immediate occupancy.

You have to respect that your buyers have given someone notice that they are leaving where they are currently living, someone might be moving in the day they leave so even a day or two delay can become a big issue when left till the last minute.  Just like they can not be unreasonable regarding their moving in, you can not push things to their limits and expect the buyer to be happy about it.

I did mention communication, respect and fairness quite a bit in this blog, which I don't normally focus on but these are 3 things that can help prevent ripples from turning into tidal waves of frustration.   Whether your selling or buying a home it is a huge decision and as Realtors we chose to do this, and it is my opinion we should always try our best to make sure you are informed of even these basic guidelines to ensure things go smoothly.  

Your Moving Checklist !

So you got an accepted offer, went thru a home inspection with which any luck went well.  You met with your lawyer and signed the contracts which means now it is a waiting game until you close.  There is not much left for you to do, and your mortgage broker and lawyer will really be handling 98% of what is going to get you that new home, and your Realtor is now for the time being on the back burner.  You will usually have between 90-120 days before you close on your new home but you have started a new phase of the home buying process so I decided to take the time to give you some advice for your "Moving Checklist"!

90 - 120 Days Before Closing 

• It is time to sort and purge ! This is the time to clean out the closets, get rid of any of the junk that you are not going to be taking to your new house.  Go thru your basement, garage, and attic to see what it is you will be taking and what you will need to put into movable containers.  
• Organize ! All those important papers that you may have scattered around the house, make sure that you have everything in one place.  If your anything like me you have alot of important papers, to make your life easy I suggest simply picking up an inexpensive 2 drawer LOCKABLE filing cabinet.  It keeps the items safe, and they won't be disturbed during the move! 
• Research ! You will want to find a reputable, and fairly priced moving company waiting till the last minute is never a good idea.  If you plan on having work done to the home before you move in like painting you will want to take the time to get estimates from them as well.  Coldwell Banker Residential Brokerage is one of the few companies that have made these things much easier by having our "Concierge Services" for our buyers and sellers.

60 - 90 Days Before Closing

• Order Supplies ! Moving boxes, tape, bins, you will always find yourself needing more than you may have originally expected.
• Use it or lose it ! This may sound silly but all that frozen meat in your freezer, start using it up so you don't need to worry about packing an entire cooler to transport a ton of food.  I personally come from a large family where having 2 refridgerators is very common, so we usually have quite a bit more food than you may think.  
• Measure it ! You will want to make sure that your furniture is going to fit into your new home, I usually suggest to buyers while we are in the home for the home inspection that they take actual mesurements of the rooms this way they can have a good idea of what needs to fit where.  
• Moving Sale ! If your having a moving sale it is time to set up the date/time, and what you will be doing with the things that you don't want if they don't sell.

30 - 60 Days Before Closing

• Pack Up ! Start packing all those things that you don't often use, leaving yourself with just the necessities and a "limited" wardrobe.  Make sure that you clearly label all of your boxes appropriately, do not mix fragile items in with the blankets it is a disaster waiting to happen.  
• Change Your Address! Now don't stop your mail coming to your current home as of yet, but many local post offices will allow you to set a date when to stop your mail from coming to your current home.  As a back up plan talk to your neighbors and ask them to keep an eye out for your mail, or if your home will have new owners leave some self addressed envelopes with your new address for them to forward your mail if any comes to them.  You will want to update your workplace, and your childrens schools.  
• Utilities ! You will want to get on the phone with your utilities companies, cable company, telephone company so they will be aware of the change of address and service.  Sometimes they will need notice in order to prevent any delay in service to your new home.

2 Weeks Before Closing

• Re-Confirm Everything ! All those appointments you made reconfirm every single one of them, make sure your closing date has not changed, and that your job is aware of how many days you will not be at work. 
• Take Inventory! You want to take count of how many boxes you have and in some way organize them, this way when you get to your new home and everything is unloaded your will be positive everything made it.  

At this point you will be going thru the last steps for the purchase so the best advice I could give you is to stay organized, and try to keep calm !!