The time has come to let go of your current home, and congratulations, you got an offer from a prospective buyer! Now, the question is, what should you take into consideration when looking at an offer? Here’s what you and your REALTOR® should look at when deciding whether to accept or reject an offer, because the highest offer may not be the best choice.
The Earnest Money Deposit
An earnest money deposit is the money a buyer is offering to pay when the sales agreement is signed. This money, which is usually 1-3% of the house’s cost, gets held by the title company and put towards the buyer’s down payment during closing. If a buyer tries to back out of a sale without reason, this money is given to the seller. So, the higher the earnest money deposit, the more serious a buyer is about buying a home.
Contingency agreements must go through before a home is sold. The fewer contingencies, the quicker a home sale will be complete. There are five common contingencies, including:
- Home inspection
- Sale of current home
While an appraisal contingency is required to approve a loan, you can talk with your REALTOR to determine if you’d like to negotiate any of the other contingencies.
The more a buyer puts down for a home, the more likely a lender will approve their loan. Cash offers typically lead to quicker closings, as a mortgage lender doesn’t need to be involved, there’s less risk of the offer not panning out and appraisals aren’t necessary.
A typical home sale, from offer to closing, takes between 30 to 60 days. Your circumstances, combined with the seller’s, may determine what offer you take. For instance, if you already purchased a new home, you may be looking for a buyer who can close quicker.
As always, your REALTOR® will be able to guide you through the selling process. If you’re thinking about buying or selling, start your REALTOR® search here.