Jim Valentine: When the offer comes
November 6, 2018
So you've been on the market for a while with showings but no offers. Since you've had showings, you know there is a market for what the buyers are expecting to see. What are they seeing that is causing them not to act? This is a brisk market and things that are priced right are selling. If you are getting numerous showings without an offer, you are probably overpriced, providing your property isn't too esoteric.
Once you get dialed in on price, offers will come. Now you have some decisions to make. If it is full price, all cash, the decision is easier. If it is off the mark, a bit with conditions, it is time to decide what the offer will do for you. Don't get hung up on price, it is but one component of the offer package. How long until they want to close escrow? Typically, we can close in 30 to 45 days if a buyer is getting a new loan. If they are asking for a longer period, find out why. It might work out better for you anyway, but be sure that they aren't camouflaging an undeclared contingency with the longer timeframe.
If you need more time, you might ask to close escrow earlier and rent back. Rentbacks range from free for a short period of time to paying the buyer's actual daily holding cost if they have a loan. The benefit of closing and renting back is that you have your money before you actually move out of the property. It is better than waiting longer only to have things fall apart.
In an active market, it isn't uncommon for sellers to think they might be the hosts of a bidding war with multiple buyers driving up the price. We've all read about homes in other areas that sell for prices amazingly higher than the list price. Who wouldn't want that? Unfortunately, while our market is dynamic, it isn't competitive to that extent. Buyers seem to have a top end above, which they will not venture. You might get multiple offers, you might get someone nudging over the list price, but don't hold off acting on an offer in anticipation of getting multiple offers. You might lose the bird in hand while you rustle the bush.
When you get an offer, read it carefully. There are a lot of details that can impact you during the course of the escrow. Your agent should be able to show you the financial components of the offer, i.e. your estimated proceeds. There are also contingencies, some of which have more risk than others. If it contains a sale contingency for a property that isn't in escrow then you should find out about the market for that home and how it is priced, or going to be priced. The new sale contingency clauses freeze the sale, so you could be tied up for a while. You can modify the language, if necessary, to allow for some flexibility on your part until the property sells. Talk to your agent about it.
Feel free to accept a second offer in a backup position. While it isn't what a buyer wants, it holds their position while they continue to look at other homes. If they find one, they can rescind and buy the other property. Once in a while, the primary offer blows up and the backup moves to primary position. Those are usually thankful buyers who will work hard to close the escrow.
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Our advice: Trolling for the offer is one stage of the selling process. When you get the offer is when you can really shape the character of your sale to the benefit of you and your family as well as the buyer. Pay attention to the details and talk to your agent about timing, costs and contingencies so you are as comfortable as you can get with the offer. If the buyer is solid, they will work with you as best they can. Everyone wins in a properly thought-out and negotiated transaction.
Be thankful when you get an offer. It is the beginning of the process to get you moved. Tweak it if you want or accept it and start packing. Everything hinges on the offer. When it comes to choosing professionals to assist you with your real estate needs, experience is priceless!