Sellers who wait until they're faced with a buyer's offer to purchase before initiating three key actions, may be forcing themselves to make too many decisions at once and too quickly.
Most of us are nervous about decision making. Many lack confidence in their ability. Yet, sellers will be faced with quickly making multiple financial, legal, and lifestyle decisions when a buyer's offer is presented to them.
There are 3 key positive actions sellers should begin before offers arrive, so that they are prepared for decision making and are less overwhelmed by the selling process:
#1. Start thinking that you're living in the buyer's new home.
Mentally move out. Let go of "mine." Cut the emotional cord. Concentrate on making the property as attractive to buyers as possible and practical. If you wait to start this "cut the emotional cord to home" thinking when your real estate professional presents you with an offer, you're doing yourself a tremendous disservice. Making confident decisions is difficult when you're distracted by pride of ownership and personal history.
#2. Start thinking about what the buyer may ask you to do.
Anticipate buyer requests regarding financing, moving dates, and other factors that may cause inconvenience or cost to you, the seller. For instance, if you had to wait many months for closing and the money from the sale, what problems could that cause you? Conversely, consider costs attached to moving in less than a month or at least sooner than convenient. Do you understand possible costs and considerations if buyers ask you to hold a second mortgage to enable them to pay the top dollar you ask for? Ask your real estate professional to explain how seller-held mortgages work and what would have to be true for you to sell that mortgage and realize cash.
#3. Start thinking beyond list price to achieve full offer value.
The value expressed in a buyer's offer to purchase involves 5 key elements - it's a financial package:
- Purchase Price is not automatically the amount the seller receives since other factors, like unpaid property taxes, can reduce the total. It's not the purchase price, but the net proceeds of the sale that sellers should concentrate on. Real estate professionals can calculate, or at least estimate, the seller's net proceeds after costs related to the offer and deduction of commission.
- Closing Date, or the day ownership is transferred and the seller receives the money, can represent cost or value to sellers. If the seller has to make two moves or has to pay two mortgages during the transition from one home to another, costs can add up and offer value goes down.
- Inclusions and Exclusions represent costs and value. Appliances, light fixtures, and draperies are common seller inclusions, but the cost of replacing them in the next home reduces profit.
- Terms and Conditions are clauses in the offer which cover "what if" risks and the obligations of both parties. These clauses detail what the buyer asks the seller to do for the purchase price. The degree of uncertainty attached to the conditions and the buyer's related ability to close effect the value of an offer.
- Intent and Sincerity are vital aspects of an offer although difficult to quantify. For the seller, offer value lies in the certainty that the buyer will close in spite of market shifts and other problems ahead.
Note: For more on how an offer can translate into value for sellers, read The Offer: There's More to It Than Price."
Weeks or months may pass from the time that you decide to sell and the day your real estate professional receives an offer to present to you. This key stage of selling your home is no time to discover:
- what you didn't understand about selling
- what you haven't considered thoroughly
- which details comprise your ideal outcome.
Suggestion: To prepare for offer presentation, read the offer form standard clauses soon after listing, so that you understand what the small print commits you to do, protects you from, and leaves you vulnerable to. For instance, the seller is usually responsible for keeping the property fully insured until title changes hands. Do you understand what responsibilities you have if flooding, storm damage, or fire strikes before then? Ask your listing salesperson to show you typical offer clauses well in advance, so you have time to digest details and ask a lot of questions before you're up against the offer deadline which may only be a few hours away.
Discussing strategies and contingencies with your listing salesperson ahead of offer presentation will help the professional negotiate a solid high-value Agreement with the buyer. Mentally preparing yourself, and anyone else who has a say in what happens to the property, means no one will be pressured into snap decisions or miss opportunities under the tight timelines common with offers.
Real estate professionals are trained to help sellers make decisions in their own best interest by providing necessary context and details, but these professionals cannot advise sellers exactly what to do, nor make decisions for them.
To gain full benefit from the knowledge and experience of the real estate professional who lists your real estate, let them fully prepare you for offer presentations in advance. When an offer comes in (usually at a very inconvenient time), you'll feel as confident and prepared as possible faced with this life-changing opportunity. You will understand which decisions to make and how to evaluate the full offer.