Last week, I shared strategies for marketing and listing your home without a real estate agent, allowing you to pocket the 3% commission a seller is responsible for paying their agent. Now, I’m going to look at how to close the deal once you receive an offer, saving you as much money in the process.
Receiving An Offer
A buyer’s offer includes much more than just a number on a sheet of paper. There are a slew of other factors to consider, including:
- Asking the seller to pay closing costs
- Contingencies (such as giving the buyers extra time to close so they can sell their current house)
- Leaving behind appliances
- Requesting pre-sale repairs
- Buyer’s agent fees (usually 3%, although you may be able to negotiate this to as low as 2%)
- Deciding who will pay remaining homeowner association dues and property taxes on the property for the remaining calendar year
- Ensuring the buyer is pre-approved for a home loan
Once you receive an offer, you’ll have a short review period – the length of which is often specified by the buyer’s agent – to go over all the details with a fine tooth comb. Unless you have experience working in the real estate or legal fields, this is a place where you’ll want to spend money to ultimately make money.
Some Realtors offer flat-fee services to go over offers with sellers who aren’t working with an agent; or, you can hire a lawyer who specializes in real estate to do the same thing. The fees here are usually a couple hundred dollars, but can help you expedite the selling process by helping you understand industry jargon and eliminate any potential loopholes.
Negotiating Your Sale Price
If you did your research before putting your home on the market, you know what a fair asking price is for your property. But negotiating an offer on your home is often anything but fair. From the buyers’ point of view, they’re trying to get the lowest price possible; you want the highest price. Common sense would say you’d end up with a final sale price somewhere in the middle, but emotions and sheer stubbornness often muddy the waters – and those traits usually apply to the seller, whose emotional attachment to the property often prevent them from accepting what is a perfectly reasonable offer.
As you negotiate, it’s crucial that you remember your motives for selling in the first place and check your complicated feelings at the door. Accepting an offer that’s $5,000 less than your target price may seem like a kick in the pants, but when the result could be another two or three months on the market – and making payments on the property – the ultimate difference may be a wash. You may also be more inclined to accept an all-cash offer, since closing won’t be delayed because of things like…
Inspections and Appraisals
Today, the majority of lenders require buyers to secure a property inspection and appraisal before the loan can go through. The underwriters are looking for a guarantee that a home is a good investment from the bank’s point of view; a house that needs a new roof or appraises for $20K less than the proposed offer send up red flags, and are likely to delay the closing process. If you are at all concerned about the outcome of these actions – the fees for which are typically paid by the buyer – you may want to bring in an inspector and appraiser before listing your home. That way, you’ll be prepared for any bumps along the way and can price your house accordingly.
In most situations, the buyer comes to closing with checkbook in hand, while the seller isn’t responsible for paying for anything at this point. However, in some locations, the seller may be responsible for paying:
- Title or deed transfer fee: where I live, this is the seller’s responsibility, and runs about $400
- Title insurance: this premium is usually paid by the buyer, but may be negotiated to become the responsibility of the seller; again, this runs several hundred dollars, depending on the property and where it’s located
You can choose to represent yourself at closing, but this is another situation where paying a real estate attorney a flat fee to attend the proceedings on your behalf (to look for any discrepancies, and deal with any last-minute problems). If you hired a lawyer to review the offer, their assistance on closing day may be covered under the initial flat fee.
You won’t receive your portion of the sale price at closing. The buyer’s monies will go directly to your mortgage company, which will send you your portion within a few business days after closing. Because you worked without a seller’s agent, it will fall to you to pay that buyer’s agent commission directly.