Continuing on in the series Selling a home in Los Angeles, we will discuss the next phase which is when the offers start to come in.
Hopefully you have priced your home to sell and will get interest quickly. Today, homes are at a premium. It is a sellers’ market and buyers are looking for good properties. You will likely get into a multiple offer situation. Let’s first talk about how to handle a single offer scenario. You will work with your Realtor® to determine the next step.
The first offer is almost always the best. This is assuming that the offer is a reasonable one. You may receive a lowball offer, and it will be up to you whether to respond or not to see if they are at all serious. But back to the reasonable offer. Rarely does the perfect offer come in, and so here are some things to consider. The price may be lower, but how are the terms? Do they make up for a lower price? Any or all of the items on the purchase contract can be countered, including the price. These are some of the things to look for in a buyer’s offer:
How strong is the buyer? Your agent will check with the lender to see how likely the buyer is to close. Purchase offers come in with a “pre-approval” letter, but these so not ensure that the buyer will end up qualifying for a loan. So many homes fall out of escrow because of this. A buyer with a good chance of closing is a strong buyer.
What kind of a loan is it? An FHA loan for instance may require work to be done by the seller before the loan is approved. Also the buyer will be putting down 3.5% versus the 20% buyers with conventional loans will be putting down.
An all cash offer should be accompanied by proof of funds. These kinds of offers generally come without a loan or appraisal contingency period and are worth their weight in gold. You might consider a lower price on these because the chances of closing are higher. However beware. Make sure the cash buyer is not an investor because chances are you will not be the only property on which they are presenting an offer. Dig deeper.
- The Good Faith Deposit. This should not be less than 3% of the total list price.
- The escrow period. Usually this is between 30-45 days.
- The inspection contingency period? This is the period the buyer has to do all their inspections. The standard on the contract is 17 days, but a good offer will reduce that to 7 or 10 days. This is plenty of time to complete the due diligence period.
- Home Warranty. This is insurance the seller usually pays for to cover appliances, HVAC, etc. in the home for the first year. Generally the buyer asks for a policy between $350 to $500. This is a small amount and usually is not an issue, but it is worth noting.
- Requested items. Is the seller asking for personal items such as the living room chandelier, a piece of furniture etc?
- Special requests. Is the buyer asking for anything unusual like a long escrow? Is the offer contingent upon them selling another property? The cleaner the offer, the better the chances of the buyer closing.
Any or all of the above items may be countered by the seller. Or if everything is acceptable then the seller may accept the offer
In the case of a multiple offer situation, each offer will be taken into consideration. The same applies as above, and if one offer stands above the others, it may be accepted. If not all offers may be countered with the same terms or each one with individual terms. Often a price will be suggested on the Multiple Counter Offer form or the term “Best and Final”, which will encourage the buyers to make their best offer.
Time is of the essence when receiving offers, so be prepared to sit down with your Realtor® to review each one as it comes in, so you can reach the next step of the process: Escrow.
Selling a Home in Los Angeles: The Series:
Step 1: Hire a Los Angeles Realtor®
Step 2: Get ready to list
Step 3: Handle the offer(s)
Step 4: The escrow process
Step 5: Prepare to move
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