UrbanInsight Newsletter: Spring 2004

WITH SPRING COMES ONE OF THE MOST POPULAR TIMES OF THE YEAR TO SELL PROPERTY. THIS SPRING HAS BEEN EXCEPTIONAL WITH MANY PROPERTIES ARE RECEIVING MULTIPLE OFFERS.

Typically this can increase the selling price beyond asking. But if you are one of the lucky sellers who receive multiple offers on the sale of your property, does that mean you should accept the highest offer? The answer is not always yes.

If you are a seller looking at a multiple offer situation, it’s my job as your agent to help you navigate the sales process and evaluate these top four criteria (along with the rest of the contract) to decide which offer to accept:

1. No contingencies: This can be a plus or a minus. A “no contingencies” offer can help make the escrow run smoothly, giving the buyer little opportunity for a way out of the contract without a financial penalty. If the deal goes through and issues with the property are later uncovered, there could be legal ramifications (see point #4). If the deal does not go through and your back up moves on to another property, you have lost time and possibly money. For example: By the time your unit is offered to buyers again, market conditions may no longer be in your favor, and after being on the market for such a long period, buyers may consider your property stale.
2. Close of escrow: Perhaps there is a long close of escrow on the highest offer, but a lower offer has a much shorter close of escrow period. Depending on your goals it could be in your best interest to close sooner. It would allow for less time in which the contract could default.
3. Finance terms: What type of financing terms does the buyer need? One hundred percent financing has become very popular, but if interest rates increase, this option poses significant risks. Lenders are much more fickle with 100 percent financing loans than if the buyer is putting down 10 to 20 percent of their own money.
4. Inspections: I usually recommend to sellers that the buyer have a choice in getting a contractor’s inspection. Requiring a short time to sign off on this contingency (3 business days) creates a win-win scenario. Keep in mind there could be a potential lawsuit later if you did not disclose everything you could think of at the time of completing a seller’s disclosure. The extra assurance of a contractor’s inspection is third party verification that the property is a sound purchase. Of course there are many more variables to consider when reviewing an offer, but these highlights provide an overview for this often-confusing process. The most important step is to clearly define your goals and needs upfront with the agent before bringing your property to the open market.

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Spring 2004 Table of Contents