Home sellers are reluctant to say no to offers these days. The fear of losing a buyer overwhelms the reasoning behind selling in the first place. In such a strong buyer’s market, it is very common to find a home seller ready to take imperfect offers and risky buyers.
There are three reasons, though, that should have any home seller rethinking an offer to purchase:
Reason #1 to decline an offer: The closing date is inconvenient. Sometimes home sellers don’t think long and hard enough about the closing date in the offer to purchase. This is a very important date and it can’t be easily renegotiated at a later time. Don’t underestimate the importance of carefully considering when you will be ready to close.
What will you have to do before the closing date? Usually you will want to wait until the buyer has funding for the home, so that means you want to look at the time between the mortgage contingency expiration and the closing date to assess if this is enough time for you to pack and move. If the buyer is denied a mortgage, you will be going back on market, and it is most often best to leave the home in showing condition, rather then empty. So don’t pack too early.
Ask yourself, do I have where to go? How long will it take me to pack? Does this closing coincide well with any work commitments or vacations coming up? How does this fit into the school year? If these things are not in place or worked through somehow BEFORE you make a commitment to the buyer, you can end up wasting lot of time and money trying to move out of the home while leaving your life in tact.
Reason #2 to decline an offer: The buyer is risky. This is a big one!!! Many buyers are risky these days. There are few things more frustrating to both the home seller and the listing agent than to go through negotiations, an inspection, planning a move, etc, to find out that the buyer is denied funding. This is happening more often than ever. Ask your agent the following questions: Has the buyer been pre-approved? Is the pre-approval from a reputable financial institution? How much down payment does the buyer have?
If you are selling a condo, this is even trickier. Many buildings are not approved for FHA loans, which means buyers with a low down payment are rejected for a mortgage. Your agent must know ahead of time if the building is FHA approved, and if not, ensure no buyer who needs FHA backing is even considered.
Reason #3 to decline and offer: Too little money. Honestly, in this market, home seller disappointment in the final sale price is a common occurrence. But this does not mean you just take whatever you get. You and your agent must know what has recently sold in the area, what the most you can expect for the home, and not expect much less than that. If you home has major faults, don’t deny it and be realistic about the price. Expect a fair market price, and the buyer should expect to pay it.
All these reasons for a home seller to decline an offer to purchase, even in a buyer’s market, represent the most important elements of an offer. The price, closing date and risk level of the buyer should all be discuss and well considered. Most often, when you decline an offer, you should think about a counter offer and hope to reach an agreement. A flat out “No” can mean the end of a deal that could have come together. But, as a home seller, you should be realistic about the market while maintaining your confidence in yourself and your home.
Have you gotten some low-ball offers lately? How did you handle them?