How to Analyze an Offer and then Counter-Offer
By Sadiya Anjum
You put your home up for sale and you now have an offer on the table. The ball is in your court and you have to decide whether or not you are going to accept the offer. Obviously the price is the first point you are going to look at. You can easily expect it to be lower than your asking price, but before you reject the offer completely have a close look at the whole purchase-offer form.
A time frame will be set in any offer (generally 72 hours) called the Irrevocability Period. You have to respond to the offer within this period or else it becomes void. So, start with carefully reading the offer and marking out terms that you are not too happy with. It is important that you get some professional help when you are going over the offer. Offers will be made such that they favor the buyer. You may not be able to detect the actual meaning behind the long-winded sentences, hence call your agent or an attorney.
The price should be discussed with your spouse/ agent/ attorney. Put some fair thought into this before you decide how much you want to counter with, i.e. if you want to counter at all. Scrutinize stipulations that may allow easy escape routes for the buyer but allow little or no such routes for the seller. Watch out specifically for contingency clauses regarding the buyer selling his home first.
You also need to determine if the buyer himself can be relied upon. Will he be able to get financing? Is he a serious buyer? Although an earnest money deposit is a fair indicator of the buyer’s intentions, do not lay too much importance on this. See if the buyer has a pre-approval letter and find out how much loan he is obtaining.
If you are satisfied with the offer you can sign. But once you put your initials on the form, know that it is now a legally binding contract and if you change your mind, you will have to face the music. If you are not quite happy then you may have to write a counter offer. But you have to word it carefully and avoid chasing the buyer away especially if you have not had too many buyers knocking on your door.
You do not have to counter all the terms and should avoid countering the small stuff. You have to pick your battles because you cannot possibly win it all. Know what your priorities are and work towards winning in these aspects. If presenting a counter price, you should drop down a bit to make it more favorable. But if the price asked is too low, before rejecting the offer consider the market situation. Perhaps you have over-priced your home or the market is now slower than when you put your home up for sale.
When dealing with a contingency clause related to the buyer selling his home first, you may want to reject this completely unless the buyer’s home is already in escrow. Alternatively, you can put in your own clause stating that if a better offer comes along you will be allowed to accept it. You will notify the buyer if this happens and within 72 hours (after notification) the contract will be canceled.
Make sure you include time frames in your counter offer regarding certain items especially financing. If the buyer does not obtain a loan within a certain period of time (about 30 days) then you may choose to cancel the offer. It would be unwise to put your home out of the market for too long in case the deal fails.
When composing a counter offer, you are basically fine tuning the offer presented to you. You do not have to rewrite the whole offer or start from scratch. Just include paragraphs about the conditions unacceptable to you and detail out the terms you have changed.
Once you present you counter offer to the buyer, he may accept it or counter counter-offer it. After some negotiation and with careful handling of the situation, both parties may finally come to an agreement and sign.
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