If you’re considering listing your home, we’ve been writing a series on steps that occur for the home listing: initial steps prior to listing and what happens once a home is on the market. This week we’ll cover the next phase: once a property receives an offer. Below is a general overview of our process; of course, the steps may vary based on each individual situation.
Once an offer has been made, the broker reviews the offer, then we call our client to highlight some of the key elements. After an initial overview, we will often meet in person to review the offer or send it for review, followed by a thorough discussion.
Response Time: Typically, the response time from the seller is determined by the offer. Oftentimes the real estate broker on the other side (the buyer’s side) will give a limited time period for response. In some cases, it can even be an unfair or too short of time period. There’s no concrete time standard, but most agents know they don’t want to compete with other offers. If the buyer and agent are truly interested, they’ll want a quick response to alleviate the possibility of another offer coming in and creating competition. Legally, an offer is no longer valid beyond the specified acceptance date and time.
Reviewing Quality (and Quantity) of Offer: Several areas are considered in the quality of the offer: price (is it within reasonable range of the listing price, an expected range?), review of how the buyer’s financing will work (how much cash, down payment, or loan?), thorough review of dates (be sure they conform with normal time periods) and they work for the needs of seller. Some of the most critical dates are: inspection, loan approval, and closing and possession dates. It is often critical for the seller to have enough time between the final contingency date and the closing and possession dates. We also review anything in the additional provisions section of contract. This is where real estate brokers will likely put any additional requirements, for example: contingency clauses, cleaning clauses, or expectations from seller. In this process, an expert is crucial to help a client review and evaluate the quality of an offer.
Negotiation: After we, both the broker and seller, have a thorough understanding of the offer dates, value, and quality, then we are ready to discuss negotiating. The negotiation process, if it’s successful, will often have up to 4 parts: first is the offer we receive, second is the counter proposal from the seller, third is a renegotiated contract or counter from the buyer, and the final is a final counter from the seller. This is not always the case, but often it takes that level of negotiation to get an offer together. Also, we have often found if we are not successful in getting an offer together within those four steps, we won’t be able to get to a successful contract.
Impact of the Market: The market will impact how long the negotiation process takes. If it’s a strong seller’s market, the buyer will likely want to give a better offer with the hopes of a quick acceptance. If it’s a strong buyer’s market, the buyer will be asking the seller to participate more. Checking comparable sales of homes is part of this process. One of the key statistics that helps a seller know what a fair negotiation is for their home is the comparison of final sales price vs. the last list price for comparable homes. For example, if there have been 15 home sales and the final sales price vs. the final list price is 95%, then we can conclude there was an average of 5% negotiation. Obviously, this is where expertise can make a drastic difference, and this is a very thorough process. In addition, access to reports and numbers allows the data to be considered and evaluated. An expert needs to guide clients through this process to achieve optimum results. At The Durango Team, we take this process seriously, and strive to guide our clients through each step of the home sales process to allow a seamless home sale. We would love to discuss this process further. Please contact us if you have any questions!