Sell Your Home in 10 Weeks: A Series - Part 3 of 4
In Part III, we will review the fine points of getting an offer on the table, negotiating the terms of the sale, and finalizing the contract. Part III represents Weeks 4, 5, and 6. If you missed my earlier posts, feel free to refer back to Part I and Part II.
Part III, Week 4: Reviewing the Market
Your home has been on the market for several weeks, you have had numerous showings, and your agent held an open house for you. However, no buyer has stepped forward with an offer to purchase your home. What next?
More than likely, your REALTOR will want to review market conditions with you. In a time when conditions change from week to week, it is wise to re-examine what has happened in your market since your house was listed.
Assuming you have been able to maintain the conditions recommended by your home stager, your REALTOR will most likely recommend that your home be repositioned in the market through a price reduction. Even a slight reduction can be enough to rekindle the interest of buyers who have been keeping an eye on your home sale progress.
Be aware that you will want to keep your home priced slightly below the market in your area. When buyers, and other agents, see that you are reducing the price on your home, it will serve as a signal that you are aggressively seeking to sell your home. This will often draw back those buyers who viewed your home once already and wish to come back for a second visit.
Quite often, a price reduction is enough to get buyers excited about purchasing your home. Let's say that two days after repositioning your home in the market, your REALTOR calls to say that a buyer has submitted an offer.
Part III, Week 5: Dealing with Offers
Once your REALTOR has an offer in-hand, he or she is obligated to present it to you regardless of the amount and terms being offered. When you sit down to discuss the offer, you will be tempted to react based on the purchase price offered. Try to maintain self-control until you discuss all of the terms with your REALTOR. A strong purchase price is exciting, but you also want to consider:
- Financing of the buyer - do they have a pre-approval from a reputable mortgage lender?
- Deposits - how much risk is the buyer taking? Did the buyer's agent submit the money deposit with the offer? Are they putting down $1000 or $10,000? This is an indicator of their seriousness and possibly their financial stability.
- Closing date - is their desired closing date in line with your plans? Are they asking for an unusually long length of time for closing?
- Contingencies - do the buyers have property to sell? Are they asking you to include items that you wish to exclude? Are the home inspection time-frames in line with what your REALTOR would expect?
After considering all aspects of the offer, not just the price, discuss with your REALTOR your next move. Will you accept the offer as it stands? Will you decline it? Or will you make a counter-offer?
Since an offer is an indication of interest on the part of the buyer, I'd suggest that you consider making a counter offer. Your REALTOR will advise you on the options for doing this. You don't want to make a counter offer that gives too much away at one time. Neither do you want to make a counter offer that is so small a step that it is a waste of everyone's time to discuss it.
The negotiating stage can be stressful for both buyers and sellers. Be polite, be grateful for an offer, and try to remain cool if the buyer makes a counter offer as well. If they really love your house, everything will come together.
Part III, Weeks 6 and 7: Home Inspection and Purchase Contract
So, you have reached an agreement with the buyer. What do you do now?
Buyer Home Inspection: In the state of Massachusetts, the buyer will usually want to have a home inspection before signing the final purchase contract. The home inspection will take about 3 to 4 hours, depending on the size and condition of your home. But remember - you also had a home inspector review your home, so the buyer's inspection should go quite smoothly.
Be prepared for one possibility: If a problem is found on the home inspection, the buyer will most likely want it repaired, or may ask for a credit so that they can fix it themselves. Sometimes the home inspection ends up being a time for another set of negotiations. Be prepared, just in case.
Purchase Contract: During these two weeks, you will need to be in contact with your attorney. He or she will be responsible for drawing up the purchase contract, more formally known as the Purchase and Sale Agreement (P&S for short). The P&S is the legal document that describes all the agreed-upon terms of the sale.
Once the home inspections are complete, and all negotiating is complete, your attorney and the buyer's attorney will discuss the P&S. The buyer will sign it first. Then, you (the seller) will sign it.
The buyer is obligated to provide a second deposit at the signing of the P&S. Your REALTOR will make sure this is all on track and that the buyer has put down this deposit. Either your REALTOR's firm or your attorney will hold any deposits made by the buyer until the closing, at which time those monies will be credited to the buyer's down payment.
Buyer's Mortgage Commitment: This is the last important step in this phase of the sale. After the buyer and you have signed the P&S, the buyer must obtain what is called the Mortgage Commitment. This is a letter from the buyer's lender stating that the buyer is indeed qualified to obtain a mortgage in order to purchase your house.
The buyer will have to provide the lender with such documents as tax returns, pay stubs, debt records, credit card records, and bank account balances. The bank will also send out an appraiser to confirm that the purchase price of your home is indeed in line with the amount the bank is willing to lend.
If all goes well, the bank will issue the buyer's mortgage commitment letter about 7 to 10 days after the signing of the P&S. You can breathe a big sigh of relief once this major milestone is passed.
Next time, I'll talk about the final steps of selling your home. Until then, it is time for you to start packing!
Yours in real estate,
- Kathryn Acciari, REALTOR
RE/MAX Professional Associates
49 Main Street
Sturbridge, MA 01566
(508) 982-0686 cell
By the way, if you know of anyone moving to Central Massachusetts, it would be my pleasure to help them find the perfect home!
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Text and photos copyright Kathryn J. Acciari unless otherwise noted.
All rights reserved.
Kathryn Acciari, RSPS, SRS, RESE, CFA
Century 21 MetroWest
45 Lyman Street Suite 14
Westborough MA 01581
Serving the Route 9/20 Corridors of Central Massachusetts
Sturbridge to Westborough
Cell: (508) 982-0686