Step 9: Receive an Offer.
All of your hard work has paid off, but you won’t know exactly how much it’s paid off until you see the offer. This is an exciting, often emotional time, so be prepared.
Your REALTOR® will walk you through the process. You'll see every offer.
It’s required that your REALTOR® show you every offer that’s submitted. They’ll call for an appointment, usually at your home, to discuss the offer.
The buyer’s REALTOR® will probably be there too.
They are there to represent the buyer’s best interests in the negotiation. The buyer will not be there, so you can review and respond to their offer without any awkward pressure.
Your eyes will be immediately drawn to the price!
Here’s where emotions can really kick in. This isn’t a poker game, but remain calm. Listen to the REALTORS® before making any judgments.
You’ll probably ask the buyer’s REALTOR® to leave the room.
Now you and your REALTOR® are alone to discuss the merits of the offer. Maybe it’s time for a high five, or maybe it’s time to plan your counter offer. You may also wish some private time to discuss things with your spouse.
About the offer: When it comes to the type of offer you receive, it really depends on your buyers individual situation.
Firm Offer to Purchase: Usually preferable to the seller, you, as it means the buyer is prepared to purchase the home without any conditions.
Conditional Offer to Purchase: Usually means there are one or more conditions on the purchase, such as “subject to home inspection”, “subject to financing”, etc. The home is not sold unless all the conditions have been met.
Acceptance of Offer: An Offer to Purchase is presented to you the seller who may choose to accept the offer, reject it, or submit a counter-offer. The counter-offer may be in regards to the price, closing date, or any number of other variables. Offers can go back and forth until both parties have arrived at an agreement or either side ends the negotiations.
Three Options when Responding to an Offer.
1. You can accept the offer.
You got the price you were hoping for, maybe even more! The closing date looks good and there are no fussy conditions. Sold!
2. You can reject the offer.
This offer isn’t even close.
3. You can “sign back” or “counter” the offer.
This offer is close, but something’s not quite right. Now the delicate art of negotiation begins, by “signing back”.
Reasons Why You May Want to “Sign Back” or “Counter”.
1. You want more money.
This is by far the most common reason people “sign back”. Everybody wants to get the most for their home, and as the saying goes “if you don’t ask, you don’t get”. Go for it, but don’t get too greedy and insult someone who has made a fair offer.
2. You want to change the closing date.
Maybe your buyer has already sold their previous home and has no place to live. They want to move in soon; sooner than you’d like. Maybe you haven’t even started looking for a new home! In the same way that you can “sign back” a higher dollar amount, you can also “sign back” a compromise closing date. Perhaps the buyer is willing to offer more money to compensate you for the inconvenience of living in a motel for a few weeks. Welcome to the world of negotiation and compromise.
3. There may be some undesirable conditions on the offer.
Conditions are points of contention that must be fulfilled in order for the sale to go through. Here are some common conditions that buyers place on their offers:
Buyer to obtain financing. If the buyer doesn’t have a mortgage lined up, they will often put in this condition. The sale will only go through if the buyer can get the mortgage they want. For some sellers, this is too big an “if”, but the buyer’s REALTOR® will be candid about their odds of approval.
Approval to assume mortgage. You have a great mortgage rate on the property and the buyer only wants your home if they can also take over your easy payments. Will this potential buyer qualify?
Sale of purchaser’s home. The buyer hasn’t sold their existing home yet and they want to be protected from the expense of owning two properties. Maybe their house will sell in a flash. Maybe it won’t sell at all. Maybe you don’t want the sale of your home riding on so many maybes. Time to consult your REALTOR® about the other home and its odds of selling soon.
Property Inspection. [Linked to Step 10 of Buying] This condition is becoming standard practice. Hopefully, you have followed the suggestion of your REALTOR® and disclosed every detail of your home’s faults, so there won’t be any surprises. Refusing a home inspection before sale is highly suspicious to a buyer, and may spoil the deal.
The Art of Counter-Offers and Negotiation.
A successful negotiation is one that leaves both you and the buyer feeling satisfied with the outcome. This is a highly emotional time, so be sure to regularly “check your head”, and ask yourself “How important is this particular detail to me? Am I willing to jeopardize a sale over this?” Remember once you “sign back” an offer, you are releasing the buyer from their offer and they are free to walk away. Thankfully, your REALTOR® is an expert and seasoned negotiator, and will help you every step of the way.
Happy negotiating and best of luck!