How do I receive an offer when selling my home?
In this article:
How do you receive an offer from a buyer when you’re selling your home?
- If you’re selling the home yourself (FSBO), the offer will come either from the buyer or the buyer’s agent
- If you have your own agent, this person should advise you that an offer is on the way
- Offers may have to be conveyed on state-specific forms to be legally binding
Note that your agent has a legal duty to present all offers to you, regardless of their terms.Verify your new rate (Jan 28th, 2020)
Who is making the offer?
In most cases, the offer comes from another agent representing the hopeful buyer.
But sometimes, you receive an offer from an entirely separate source. Perhaps a colleague at work or a neighbor’s friend wants to buy your home. Or maybe one of your personal contacts on social media makes a bid.
The answer to the question, “How do I receive an offer?” depends on who makes the offer and who presents it.
You’re using an agent but receive a private offer
What happens next will largely depend on three things:
1. The nature of your contract with your agent
You may be able to accept the deal and pay nothing. But most agreements between agents and sellers contain an “exclusive right to sell.” You’ll likely have to pay the commission anyway. So you might as well have the agent conduct your negotiations.
2. Your state laws and the buyer’s representation
In some states, the buyer without an agent ends up being “represented” by the seller’s agent. This is called “dual agency” and many experts frown on it. Because there is no way one agent can fully represent the interests of both parties. In states that allow dual-agency, they may restrict the services your agent can perform for you and the buyer.
Some agents love it because they don’t have to split the commission (this is called “double-ending”). Massachusetts Realtor and real estate writer Bill Gasset has a very strong opinion about this.
“If you are selling a home, you should outright reject dual agency. You should insist that the agent you hire is a seller’s agent and that’s it. If the agent has a problem with that then you know you’re dealing with someone who cares more about their pocketbook than your best interests.”
You might accept dual-agency, knowing that you can’t get full service from your agent, and ask for a reduced commission. Or insist that the buyer gets his or her own representation. Then have their agent call yours.
3. Your confidence
The sale is only one part of what your agent does. He or she also negotiates the deal, manages the offer process (which can be technical — see below), progresses the transaction through to closing and holds your hand throughout. If doing all those things yourself fills you with dread, you might as well pay for these services.
You may not want to stiff an agent who’s worked hard for you. But, if you don’t have an exclusive agreement and this person had nothing to do with obtaining your offer, don’t feel guilty.
You and the buyer both have agents
In this case, the buyer’s agent will contact your agent — not you, because receiving offers is not your job. The buyer’s agent advises your agent that an offer is coming. If you’re expecting more than one offer, your agent might convey this information so that the buyer knows that there is some competition.
Some sellers and agents prefer to have an open house and allow bids for a limited period of time. Others like to start with a very low price in hopes of starting a bidding war. As long as you and your agent are on the same page, and you know the risks of these strategies, you can employ them.
Your agent must present all offers to you, even if they seem ridiculous. Failing to do so could open them up to a lawsuit. And the fact you previously told him or her you want at least $x doesn’t change that obligation.
Negotiating the final offer and acceptance
When you receive an offer for your home, you’re entering legal territory. Things you agree to now may be enforceable in court and things you don’t specifically agree on may be open to dispute.
In many cases, the offer goes through several iterations or counter-offers. The buyer wants to pay $200,00, and you come back with $220,000. They want to close in two weeks; you need 60 days to move. They want you to throw in the snowblower….and all of these back-and-forths are conducted in writing and come with deadlines for response.
Then, there are contingencies, which are often part of the boilerplate of a standard contract. If you don’t want them, you’ll need that spelled out in the agreement or an addendum to it. Signed by all.
Contingencies are get-out clauses that allow the buyer or seller to walk away if certain events don’t happen within a stated time-frame: mortgage approval, selling the buyer’s current home, approving an inspection, etc. These are negotiable. Understandably, some buyers and sellers have their attorneys check the paperwork before they sign.
Just to make this more complicated, different laws govern home purchase offers in different states. So you must make sure your agreement complies with local requirements.
Weighing an offer
Your first job when you receive an offer is to analyze it. Obviously, your first thought is the purchase price. But that shouldn’t be your only consideration.
You need also to look at the buyer’s financial circumstances and any contingencies. Suppose you’re lucky enough to have multiple offers. One from a cash buyer with zero contingencies and a quick close may be worth way more to you than a higher one from somebody who’s yet to sell her current home and who hasn’t been pre-approved for a mortgage.
Of course, if you’ve yet to find a home you like, you may prefer not to have a quick close. So you should accept the offer that best meets your needs, balancing price and convenience.
When there’s no agent to help
If neither you nor your buyer has an agent, make sure you write a contract that’s lawful and comprehensive. As is often the case, forms may be available online. And most office supply stores have forms. You may, however, want to spend some of what you save on commissions by paying a real estate attorney to draft your deal.
If the buyer is using a mortgage lender, that person can often tell you what NOT to include. Like if the hot tub is included, it must be conveyed at zero value because mortgages don’t finance hot tubs, furniture, motorcycles or any other incentives.
It may be helpful for you and your buyer to sit down together to complete your purchase agreement. That way, you can iron out issues and perhaps make compromises before signature.
If your purchaser has a buyer’s agent, there will be a professional in the mix. This should help you to avoid legal issues down the line.
However, you must be aware that the agent works wholly for the purchaser. It’s literally his job to get his client the best deal possible — if necessary, at your expense. And if you are selling without an agent, you’ll still be expected to pay the buyer’s agent, unless you manage to negotiate that cost away.
So, by all means, use this agent’s expertise. With the understanding that it may be used against you, as this person represents the buyer and has no obligation to you. Even if you pay the commission.Verify your new rate (Jan 28th, 2020)
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