Tips on Evaluating an Offer to Purchase Your Home

So you have done lots of hard work. You've decided to sell your house. You've painted and scrubbed and polished. You have endured open houses, nosy neighbors and building inspections. Finally, you've got someone who wants to buy your house. You've got an offer to purchase.

Fantastic! But make sure that you understand all the terms and conditions of this offer before you accept or negotiate.

Purchase Price

The major part of an offer to purchase is, of course, the price. These days, the real estate market is somewhat soft in many areas, so you may have an offer that is not quite at your asking price.

The first thing you will want to do is understand whether or not this offer is close to fair market value for your house. If you are using a Realtor to list and market your house, talk it over with him or her.

When you first listed your house, your Realtor probably gave you a list of neighborhood comparables. In other words, he or she showed you houses which have sold in the area and are similar to yours. If you are not sure whether or not the offer to purchase your house is close to fair market value, now is a good time to take a second look at these comparables.

Market Conditions

Another thing which will help you to understand whether or not the offered price is fair or not, are the current real estate market conditions. If you are in a rising market and there are not many other houses for buyers to choose from, the fair market value of your house will be a little bit higher than similar recent sales.

However, if you are in a softer market and there are many houses for sale, your fair market value will probably be lower than similar houses which have sold recently. Again, talk it over with your real estate agent. It is her job to know the local market.

Terms of Your Offer

There are other parts of an offer to purchase your home besides the purchase price which can make it more or less desirable. These terms include moving date, buyer qualification, personal property and your own motivation.

Moving Date

For example, let's say that the reason that you are selling your house is that you are being transferred and you need to move quickly. If a buyer makes an offer to purchase your house at full asking price, that's great. But what if they don't want to close for three or four months?

The opposite can be true as well. You have put your house on the market and gotten an offer right away. Although the offer to purchase is at a great price, you want your kids to finish out the school year, still several months away, and the buyers need to move quickly.

You'll have to do some soul (and pocket book) searching in these cases. Maybe it is possible for you to move and leave the house empty for a couple of months. Can you carry the mortgage for the length of time that the buyer needs to close? Or if the buyer wants to move quickly, do you have temporary housing available to you, and is it worth the hassle?

Buyer Qualification

This is huge. A buyer can make a fantastic offer to purchase your house, but can he or she actually get a loan and close the deal? Part of most every offer to buy a house must be a solid pre-approval from a reputable mortgage broker. If you have an offer to buy your house which is cash, you may request bank statements to verify that the buyer is qualified. In lieu of that, make sure that the buyer is putting a substantial down payment on your house and that it is nonrefundable. Chances are that no one is going to do that if they know they can't close the deal.

When evaluating a preapproval from a mortgage broker or banker, you will want to make sure that it is a good one. Take the time to evaluate it with your real estate agent. Does it say that the credit scores have been verified? Also, you will want to be sure that income and assets have been checked and are in order.

There is often a clause in the purchase contract stating that the buyer will be refunded his or her down payment if he can not obtain a mortgage. That is why the qualification is so important.

Personal Property

This is probably the easiest point of negotiation, but it needs to be discussed none the less. In many cases, anything that is permanently affixed to the house is assumed to be included in the sale. This does not usually include window treatments, but it does usually include light fixtures. Also, if you have a jumbo swing set in the backyard, and you are not including it in the sale, make sure your buyer understands this. There is nothing worse than getting to the closing table and having to haggle over these type of details.

Your Own Motivation

You may have just gotten a fantastic offer to purchase your home, with great terms and a qualified buyer. At least your Realtor thinks it's great. Maybe you are still not so sure. This may be the time to take a look at your own motivation. Are you trolling the real estate market just trying to get an inflated asking price, but don't really want or need to move?

Well, then this may not be the offer for you. Understand, however, that the only person who is willing to pay you more than fair market value for your house is a fool. And you know what they say about fools and their money. So, it's likely that you will not end up at the closing table.

Conversely, you are in a hurry to move and an offer comes in that is a little lower than you had hoped for. The buyer is well qualified and can move according to your schedule. Talk the offer over with your Realtor. It may just be worth it to move forward with this buyer and meet your time constraints.

Don't forget to consider your holding costs when evaluating an offer to purchase your house. In other words, how much will you have to pay your mortgage, taxes, insurance and utility bills until your buyer can close. Sometimes a quick closing will help defray these costs and make accepting a slightly lower offer worth while.

Closing the Transaction

If you keep these points in mind, you should be able to successfully sell your house at, or close to market value. Evaluate any offer to purchase your house that you receive and you will be able to understand whether or not it is a serious and qualified offer. When you get a qualified offer, be sure to consider it seriously. Don't forget that a little good faith often goes a long way in these types of negotiations. Sometimes giving a little will get you a lot in return.

Good luck with your sale. You'll soon be at the closing table!