Red Flags to Watch Out for When Accepting Offers On the Sale of Your Home
Three weeks ago you put your home up for sale and things are going quite well. The home you are moving into has a flexible closing and you are looking forward to moving in.
Two different buyers have made an offer on your present home and there is a significant difference in the price you are being offered. The better offer is from a very nice couple who visited your home several times before deciding to go ahead.
You like their offer and would like to see them as the new owners of your home. Everything else about their offer is fine and they are not making any unreasonable requests. However they have one condition; they need to sell their home before making their offer to you firm and binding.
This type of scenario in not uncommon during a softening, or more normal real estate market.
What should you do?
Should you accept the lower offer since it has no conditions, or should you perhaps gamble and go for the better but “conditional-on-the-sale-of-the-buyers-home” offer. If the buyers are not able to sell their home in time, you run the risk of owning two homes. When you have to close on your new home you may not be able to afford to carry mortgage payments and taxes on both properties.
This is when your real estate agent’s experience can make a huge difference between success or hardship. If your agent has done her due diligence on your behalf, she should have at least checked out the following:
- Make sure the buyers home is already on the market
- Is the buyer’s asking price in line with market value? If the buyers are being overly ambitious in their price, it may take considerably longer than normal to have their home sold.
- Is the buyer’s home in demand in that area, or is it a one-of-a-kind that is going to require an equally unique buyer to want it?
If you are comfortable with the above picture and want to take the higher offer, you should still protect yourself with an “escape clause.”
What that means is that you accept the better offer and insert a condition preventing the buyers from holding you “hostage” until their home is sold. This “escape clause” states that you may continue to offer your home for sale to other buyers.
If in the meantime you receive an offer that you would like to accept, the first buyer will be notified and they will have to remove their condition and firm up their offer, or allow you to accept the latest offer you have received.
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