Agent & Price
The Price Is Not Always Right.
“The higher the price, the better the offer.” Do not let yourself be fooled by this popular misconception. Price is not always the determining factor when accepting an offer for several important reasons: the initial offer is usually not final, and there are a number of terms and conditions that may influence the final outcome of a price. You can trust our professionals to help you thoroughly evaluate every proposal without compromising your marketing position.
Negotiating The Right Way.
We take the ethical responsibility of fairly negotiating contractual terms very seriously. It is our job to find a win-win agreement that is beneficial to all parties involved. You may even have to deal with multiple offers before ratifying the one you judge to be the most suitable for you – and as your agents, we will guarantee a thorough and objective assessment of each offer to help you make the right choice.
The Initial Agreement and Deposit.
An effective agreement is a legal arrangement between a potential purchaser and the property’s seller. Laws vary from state to state, but in order to be a legally, binding agreement, the agreement may require consideration. This consideration (initial and additional deposit) is to be held in the closing agent’s escrow account pending the fulfillment of conditions or contingencies in the effective agreement.
Some important tips to keep in mind to streamline the process even further:
- Keep written records of everything.
For the sake of clarity, it will be extremely useful to transcribe all verbal agreements including counter-offers and addendums, and convert them to written agreements to be signed by both parties. We will assist you in drafting all the paperwork for your sale and make sure that you have copies of everything.
- Stick to the schedule.
Now that you have chosen your offer, you and the buyer will be given a timeline to mark every stage in the process of closing the real estate contract. Meeting the requirements on time ensures a smoother flow of negotiations and also ensures that each party involved is not in breach of their agreements. During the process we will keep you constantly updated so you will always be prepared for the next step.
- Don’t hesitate to ask questions.
We know this process is complicated, don’t be afraid to ask questions. As your agent, that’s what we’re here for!
The Negotiation Phase
Once you have your home on the market and have received an offer, the negotiation phase begins. The goal of this phase is to negotiate the best possible deal for the purchase of your home.
The Price Is Not Always Right
“The higher the price, the better the offer.” Do not let yourself be fooled by this popular misconception. Price is not always the determining factor when accepting an offer, for several important reasons. The initial offer is usually not final, and there are a number of other terms and conditions that may influence the final outcome of the price. For instance, you may receive competing offers with different contingencies, or one potential buyer may want possession of the home immediately, and you’re not in a position to vacate the property until after closing. You can trust our professionals at Vanderhoef Properties to help you thoroughly evaluate every proposal without compromising your marketing position.
Contingencies? What Contingencies?
Aside from the price, one of the major elements of a purchase offer you’ll want to seriously consider is what contingencies are included in the offer. By including contingency clauses in the purchase offer, a prospective buyer can specify what conditions must be met for the purchase to be binding and finalized or closed. If the contingency is not met then the contract is considered null and void. Contingencies give a buyer a way out of the contract if the contingency isn’t removed, and in many cases, the buyer will receive their earnest money deposit back in full. As the seller, you are also protected, because the contingency clause will usually specify a time period within which the buyer can terminate the agreement without penalty. If the buyer waits too long, the seller will generally be entitled to the earnest money deposit if the buyer terminates the purchase agreement.
Particularly if you are presented with multiple offers by different buyers (or just a very good market where you feel other offers may be coming), you may view offers with fewer or no contingencies more favorably, because there’s less risk the deal will fall apart. So, for example, you may be more willing to accept a lower cash offer than an offer for a higher price with a financing contingency. That’s because the deal won’t be jeopardized if the buyer isn’t able to secure a mortgage. Similarly, you may look more favorably on an offer without an inspection contingency, because you won’t have to worry about the buyer trying to renegotiate the deal because of defects in the home identified during the inspection.
Below is an explanation of some of the common contingencies addressed in real estate purchase agreements. There may be others, as well, unique to a buyer’s particular circumstances. For example, if a buyer is interested in your home only if they can add a swimming pool or addition to the home, they may make the deal contingent on municipality approval of their plans.
- Inspection Contingency. The inspection contingency gives the buyer a certain number of days (often a week) after having a signed agreement to have a licensed, professional property inspector inspect the property. If any serious defects are uncovered during the inspection, the buyer can use this period to negotiate with you to address the defects. If a defect is identified, there are several approaches the parties can take to address the repair costs. The buyer and seller may agree to reduce the purchase price; the seller may agree to give the buyer a credit for the repair costs at closing; or the seller may agree to remedy the defects before closing. As long as the inspection contingency period has not yet expired, if the buyer and seller aren’t able to agree on acceptable terms, the buyer can generally cancel the agreement altogether and receive their earnest money deposit back, or they could decide to move forward with the agreement and address the defect at their own expense after closing.
- Mortgage Contingency and Appraisal. If the buyer is getting a loan to purchase the property, they will generally include a mortgage contingency in the purchase agreement. The mortgage contingency states that if they are not approved for a mortgage within a specified period (usually about 30 to 45 days), they can terminate the agreement and receive their earnest money deposit back.
If you accept an offer contingent on obtaining financing, we recommend that you require the buyer to show a lender’s pre-approval, approval letter, or written loan commitment, which is a better guarantee of loan approval than a pre-qualification or no documentation at all from a lending institute.
The lender will have the property appraised by an independent, licensed appraiser to determine the value for the lending institution. This is done so that the lender can satisfy itself that if the borrower defaults on the loan, the lender can still recoup its investment.
- Title Contingency. Most purchase agreements will automatically include a title contingency. This ensures that the buyer will receive clean title to the property, without any liens or other encumbrances that would allow someone else to claim title to the property after they’ve purchased it.
Another term you’ll want to consider when reviewing an offer is the closing date specified by the buyer in their purchase offer. The closing date is not only when you’ll get your money for the property, it’s also generally when you’ll have to be moved out, and the date until which you’ll be paying all the expenses on the property, such as maintenance, insurance and taxes.
The possession date a buyer includes in their purchase offer may influence you just like the closing date can. If you need time to find a new home, you may have included in your listing a term like “60 days possession.” If you require possession after closing, recognize that there will be a cost associated with that, generally reimbursement of the buyer’s mortgage and possibly other costs until they are able to take possession of the property.
Negotiating the Right Way
We take the ethical responsibility of fairly negotiating contractual terms very seriously. It is our job to find a win-win agreement that is beneficial to all parties involved. You may even have to deal with multiple offers before finding the one you judge to be the most suitable for you – and as your agents, we will guarantee a thorough and objective assessment of each offer to help you make the right choice.
At Vanderhoef Properties, we have unique backgrounds to help you negotiate each offer. From Matt’s training and accreditation as a National Association of Realtors “Certified Negotiation Expert,” to Bill’s years of experience as a litigator, your negotiation team will be hard to beat.