Sunrise Homes & Renovations, Inc.

Selling Your Home? 3 Reasons Why You May Need to Accept a Bid That’s Below Your Asking Price

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Selling Your Home? 3 Reasons Why You May Need to Accept a Bid That's Below Your Asking PriceWhen a homeowner makes the decision to sell his or her property, it is most common for a skilled real estate professional to provide valuation services so that a reasonable asking price can be established. While the asking price may seem fair to the homeowner, the fact is that not all properties will sell at the original asking price. There are several instances when a homeowner may need to consider accepting a bid that is below the asking price.

When The Property Has Been On The Market For A While

Most homeowners will learn about the average listing time for similar properties in the market through their trusted real estate agent, but some homes will remain on the market for longer than average. When this happens, a homeowner may begin to get concerned, and the real estate agent may even bring up the idea of reducing the asking price. When an offer is received below asking price in this situation, a homeowner may need to consider the offer.

When There Is A Question About Property Style Or Condition

There are many factors that will play a role in the desirability of a property in the marketplace, and some of these factors relate to the property style and condition. Some similar homes in the local area may be selling more quickly or for a higher price than others due to better overall condition or improved style. If the homeowner has concerns about this or if the real estate agent or others who have toured the property have voiced concerns about style or condition, accepting an offer below asking price may need to be considered.

When The Homeowner Needs To Sell Quickly

Even if property has not been listed on the market for a long period of time or the property style and condition are desirable, the owner may consider accepting the first offer received regardless of the asking price in some cases. For example, a homeowner may need to sell the property quickly due to financial issues, because of a job relocation or to take advantage of other financial opportunities. Unless the offer is unreasonable, the homeowner may consider accepting a lower bid in these situations.

Homeowners often wonder if they should wait for a higher bid or accept the offer that has been presented to them. Each situation is unique, so there is not a catch-all answer to this question. Those who are thinking about selling their home in the near future can contact their trusted real estate professional for further assistance.

Understanding Escalation Clauses and When You’ll Want to Automatically Raise Your Offer

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Understanding Escalation Clauses and when You'll Want to Automatically Raise Your OfferReal estate sales contracts can be confusing, and there seem to be contingencies and special circumstances for many different events built into a standard contract. One option that your real estate agent may ask if you are interested in is an escalation clause. This is typically an optional clause that you can choose to invoke if you desire, so you should take time to learn more about what it is before you make your offer.

What Is an Escalation Clause?

It can take a considerable amount of effort and time on your part to locate the perfect home to purchase, and the last thing you may want to do is to lose the home that you have fallen in love with during a bidding war with another buyer. However, you also do not want to make an offer that is so high that it is not attractive or beneficial to you. Ideally, you want to get your dream home at the lowest price possible.

An escalation clause essentially permits you to make an offer, but it has a built in option for a higher offer that will go into effect if the seller receives an offer higher than what you have offered. Essentially, it serves as an immediate response to a second offer to protect you in the event you are involved in a bidding war.

How to Use an Escalation Clause

An escalation clause can be highly beneficial, but you do need to understand how to use it. First, your initial offer should be competitive enough so that the seller shows interest in it. Second, your escalation clause offer should serve as your maximum offer. This offer ideally will remain in the limits of the market value of the home. It also should still be affordable for you to purchase. If you are not comfortable making a higher offer or if your higher offer would price it out of market value range, you may consider not using the escalation clause.

The ability to automatically raise your offer with an escalation clause can be beneficial when this clause is used properly. You can speak with your agent more about the interest in the home by other buyers as well as the overall market conditions to determine if using an escalation clause would be beneficial for you when you are structuring an offer to present to a seller.

Received an Offer for Your Home? How to Respond with a Counter-offer Asking for a Higher Price

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Received an Offer for Your Home? How to Respond with a Counter-offer Asking for a Higher PriceGetting an offer on your house is the first step in getting it sold, but buyers often feel that they have to come in lower than your asking price. After all, everyone wants the deal to work out in their favor. If the offer you received isn’t quite what you hoped, you can always make a counter-offer. Getting the details right can help make your deal go more smoothly.

Deciding On A Price

When your real estate agent helped you set the price of your home, you already had an idea of what it should fetch in the marketplace. If the offer wasn’t far off from your asking price, it’s acceptable to counter with your original asking price. Many buyers could be willing to pay full price. If you feel that technique is a bit brazen for your style, you could instead drop the original price by a few thousand dollars.

Another technique is to try to “meet in the middle”. For example, if there’s a $10,000 difference between the asking price and the offer price, you might offer to drop the price $5,000. Of course, the bigger the difference, the less enthusiastic you’ll be about dropping your price.

Factors To Consider

Keep in mind that the actual selling price of the house isn’t the only thing that will be negotiated. If you’re giving in a little bit, then you should expect to get a bit in return, but the same is true for the buyer. For example, a first-time homebuyer might not have a lot of money for a down payment. If you counter with an offer that’s too high, they might respond with another offer accepting the price, but asking for seller’s concessions at closing time.

Additionally, as you start to come down in price, you might consider taking out items that you might have included in the original offer, such as high-end appliances.

Don’t Forget The Fine Details

Discuss the details of what you want with your real estate agent. They’ll be able to let you know if you’re making the right move, considering the current market in your area. They may also have information about the buyers, such as an educated guess about how high they’re willing to go. Your agent will also have all the paperwork you need readily available. In most cases, all you have to do is fill in the blanks in a few spaces.

You want the highest price for your home, but getting the best deal is often a delicate dance. Know your limits and work together with the buyers to reach an agreement that is mutually beneficial.

Put Your Game Face On: How to Negotiate with a Home Seller and Their Real Estate Agent

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Put Your Game Face On: How to Negotiate with a Home Seller and Their Real Estate AgentAll real estate transactions come with at least some negotiations, and some transactions are heavily negotiated from start to finish. As a home buyer, you understandably want to negotiate the best overall deal possible while successfully reaching your goal of closing on the home you have fallen in love with. To be truly successful with this process, it is important that you understand how to negotiate with the seller and the seller’s real estate agent.

Understand The Seller’s Position

In order to be successful with negotiations, you will need to understand the motivations and desires of the other party. A seller may have an emotional attachment to his or her home, but he or she also may have a desire or need to move. Some may have a firm bottom line for a price that they can accept or concessions that they are able to pay for out of pocket. While some may be unreasonable, most are willing to compromise and negotiate provided that your offer is feasible for their financial situation.

Define Your True Requirements

Just as a seller will have a hard and fast bottom line, you also may have specific requirements that you need to meet. This may be a firm closing date, the need to have some of your closing costs paid or a firm sales price that you do not want to exceed. While negotiations inevitably may have you asking for slightly more than what you truly need, it is important to define for yourself what your true requirements are and to remain focused on these when negotiating.

Be Willing To Compromise

When offers and counter-offers are flying back and forth between a buyer and seller, it is easy to feel stressed and even challenged by the other party. While there are times when a seller’s counter-offer may be unreasonable, most are reasonable and fair within limits. You may decide to submit a counter-offer as well, but some compromise will show the other party that you are willing to work with them.

From negotiating a sales price to asking the seller to make some repairs to the home after the inspection has been completed, there may be different times during the process when you need to negotiate. Consider these tips to help you more successfully negotiate with the seller and seller’s agent. A skilled real estate agent can also be instrumental with representing you during negotiations, and you can seek assistance from an agent today.

Making the Offer: 4 Ways to Craft an Offer That Will Catch the Seller’s Attention

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Making the Offer: 4 Ways to Craft an Offer That Will Catch the Seller's AttentionIt can take a time and effort to find the perfect home to purchase. After you have found that home, you need to convince the seller that your offer is the one they want to choose. There may be multiple offers made at the same time, and you may be in a situation where you are competing for the home.

Even if your offer is the only one the seller receives, there is no requirement that they must accept the offer you make. Crafting an effective offer that will catch the seller’s attention is important, and you may be able to accomplish this by following a few tips.

Offer Close To The Asking Price

One of the first things most sellers will look at when they receive an offer is the price you are offering to pay. You may feel as though the seller is asking too much for the home, and your agent may advise you to offer a lower price. On the other hand, there may be multiple offers, and you may feel as though you need to offer a price higher than what is being requested. With your real estate agent’s advice in mind, consider that a seller will be more inclined to accept an offer if it is close to what they are asking. If your offer is too low, they may decline it without looking at the other merits to your offer.

Request A Quick Closing

When you prepare your offer, one of the factors that you will have control over is the requested closing date. Sellers generally want to close quickly, but this is not always the case. Each market is unique, but a general rule of thumb is to offer a closing date that is 21 to 28 days away, contingent on mortgage approval. You may work with your real estate agent and mortgage company to determine when a reasonable closing date is. However, offering a quick closing generally shows that you are a motivated buyer.

Choose A Shorter Option Period

A sales contract has an option period, which allows the buyer to back out of the deal for any reason. This may be a time when you get your third party reports, such as the property inspection, completed. A shorter option period may be preferred by sellers. This is because the buyer is generally locked into the contract contingent on mortgage approval after the option period has expired.

Offer A Higher Non-Refundable Good Faith Amount

When you make an offer, you will also give the seller a good faith or earnest money deposit. The amount of the deposit will be disclosed in the contract, and you will typically hand it off after the offer has been accepted. This is the amount of money that you stand to lose if you do not follow through on the terms of the contract. A higher good faith or earnest money amount shows that you are serious about buying the home.

There are many factors that a seller is thinking about when reviewing an offer. While the entire offer will be reviewed fully, the fact is that these factors are generally given significant weight in most seller decisions. You can work with your real estate agent to structure the best offer possible.