6 good tips to prepare for an offer on your home
July 1st, 2013
Reader Question: Monty, we listed our home for sale about a month ago. Our agent just called to say she is expecting an offer later today. We have no idea how to handle this, but we want to be smart about it. Anything we should do to prepare? Thank you. Carl and Megan H.
Monty’s Answer: Carl and Megan, thank you for the question. The saying “Luck is when preparedness and opportunity meet” is a very appropriate thought for this occasion. For most of us, receiving an offer on our home rarely happens during our lifetime. Here are 6 tips to prepare to take action.
6 tips to prepare
1. Focus on the written document and the facts. In most cases, your listing agent will not be the agent writing the offer on the house. The conversations with the buyer are being transmitted in the “offer to purchase” document. Your agent will also be interpreting the position of the buyer through the words of the agent working with them. This means there will be oral snippets and impressions from the buyer that are second or third hand.
2. A month has passed since the listing date. Ask the agent to bring or email updates on any closings and new pending contracts on other similar homes. This information provides a sense of the activity on similar homes. Ask for new listings that are now competitors, not on the market a month ago. For example, if learning there were no closings or new pending contracts, but 15 new listings, could this information be helpful when considering an offer?
3. Ask your agent to email a copy of the offer beforehand. Explain to her this preview will allow the focus during the meeting to be on the real issues without the distraction of legalize in the offer. This review provides time to formulate your questions. If she balks at this suggestion, suggest to her it will add to the quality of the conversation and conserve time. The agent may be concerned that sharing the offer without her presence may cause you to react negatively toward the proposal. Reassure her you realize rejecting an offer out of hand is almost always a poor decision.
4. Paste “drop dead dates” in the contract into a calendar or ask the agent to do it beforehand. This task helps visualize the exact timeline proposed to determine if it works. This simple action serves to establish when to expect a future call, or a notice eliminating a contingency. It also notifies you when to take an action, like calling the movers, or canceling your insurance policy.
5. When reading the offer contingencies, take notice whether the “5 W’s” are present in the language of all contingencies; who, what, when, where and why. If there is a cost associated with the contingency, who is responsible for it? When an approved pre-printed form is unavailable for a contingency and the selling agent drafted the language, read it carefully. Contingencies are a “Red Zone” for agent drafting errors.
6. Write down any review questions from the offer. When the agent arrives, allow her to present the entire offer uninterrupted, taking notes and writing down new questions as she goes along. At the end of her presentation ask your questions and record the answers. When this process is complete, ask the agent for her opinion of what she would do and why. Feel free to ask the agent follow up questions and even challenge her assessment if you still have questions. Assuming you reviewed the changes in the market, read the documents and contingencies and created a calendar timeline, the information needed to make an informed decision is clear.
Only two choices
There are only two choices to make here, accept the offer or reject it (a counter-offer is actually a rejection). The agent may be reluctant to recommend a counter-offer, because by taking her advice and having the buyer bolt, she may not want that responsibility. In reality, most buyers are expecting a counter-offer.
The market itself suggests what to do. Many agents will not do this work unless they are asked directly. They keep these facts in their head. They know, but you do not. When they share information in this fashion, it makes their job easier and your decisions more confident. Between your circumstances, the market’s input, agent experience and your own perceptions, the answer will appear.