All About Offers
Whether you’re a buyer or a seller, knowing what’s important in an offer will help you to be successful in a real estate transaction. An offer is the buyer’s proposal to the seller of what they’d like the purchase contract to look like; conversely, a counter offer is the seller’s proposal to the buyer.
There’s an adage that real estate contracts boil down to time and money. Here are the main factors to consider when preparing or reviewing an offer.
1. Price
Of course, this is almost always the largest consideration. In a competitive market with multiple offers, the offer price might be substantially above the listing price. Homes that need maintenance or appear to be listed higher than market value may receive offers below the listing price. When buyers write an offer, they should discuss market value with their agent, so they offer appropriately. When reviewing offers, sellers will recall previous discussions with their agent about market value and what to expect, so offer prices shouldn’t be too much of a surprise.
2. Closing date
Closing is the day that the property changes hands. It’s usually one to three months from the date of the offer, and both the buyer and the seller might have an ideal date in mind. Being flexible on closing as a seller or a buyer can remove that consideration from being a negotiating factor. Being strict on closing can add a layer to negotiations, such as potentially impacting the purchase price.
3. Conditions
Both the buyer and the seller may have conditions to complete in accordance with an accepted offer. These might include the obligation for the seller to provide documents like a property disclosure statement or utility costs to the buyer. They most likely also include buyer requirements such as completing home inspections and obtaining financing approval, to name a few. Both parties will have a lawyer review condition. When writing or reviewing an offer, it’s important to consider the length of time applied to these conditions. In competing situations, buyers will often attempt to remove conditions or keep the timeline short to appeal to sellers.
4. Deposit
The deposit is a sum of money offered by the buyer within the initial condition period to show their commitment to purchase the property. The deposit is held in trust (often by the listing brokerage) and is credited to the purchase price on closing. A mortgage lender will consider the deposit to be part of the down payment. The seller will review the deposit amount and delivery date to gauge the buyer’s commitment and ability to complete the purchase. It’s important to discuss what an appropriate deposit amount and delivery date should be for the market.
5. Other
There are a few other factors that might be considered when writing or reviewing offers. For example:
- Does the buyer have a home to sell?
- What inclusions (e.g. appliances) are being asked for?
- Is there any rented or financed equipment on the property and, if so, who will be responsible for it?
In any offer situation, the most important factors will be based on your personal situation. An agent’s job is to advocate for you, so tell your agent what’s critical for you! As always, communication is key—both between you and your agent, and between agents representing buyer and seller when an offer is in play.
Want to know how Roost real estate agents go above and beyond when writing and reviewing offers? Book a consultation to see if we’re a good fit for you.
