COUNTEROFFERS : How To Use Contract Terms To Reel In A Serious Home Buyer

Getting ready to sell your home? You've probably read a lot about the importance of having your home in tip-top condition and pricing it in line with current market trends. Is there anything else you can do to speed up an offer coming in? There certainly is: Offer terms that will help move or close a contract.

We often call these terms "sweeteners" because of their attractiveness to both buyers and sellers. The buyer and seller may negotiate details, but the strategy to select the best terms is in the seller's control.

You may want to put some sweeteners in your listing to attract buyer interest. Other sweeteners can be held in reserve until you have a purchase offer; you add them into your counteroffer(s) to help reach an agreement quickly. Smart sellers understand their most effective options, and after all terms are considered, select the strategies that best suit their circumstances.

Of course, not all properties, nor all sellers or neighborhoods, require sweeteners -- and very few would need to use every strategy. We'll help you pick selectively from the sampler of contract terms described next.

Settlement Sweeteners
Settlement sweeteners are options designed to help reduce the buyer's out-of-pocket costs such as down payment and closing costs, so they can swing the purchase.

Points. If you pay some or all of the buyer's points, you sweeten the purchase in three ways. First, you reduce the amount of cash the buyer needs at settlement. Second, you may provide the buyer with a sizable tax write-off, as many buyers now can deduct as a Schedule A mortgage expense the points you pay for them at closing. Third, you may help lower the interest rate for the buyer. When the seller pays points, the buyer is better able to finance the agreed-upon sales price.


Closing Costs. You could offer, instead, to pay part of the closing/settlement costs (title search, attorney's services, appraisal, recording fees, etc.) that the purchaser would ordinarily pay.


Furnishings. Include with the purchase price household furnishings the buyer would have to buy later, such as the children's outgrown swing set or sandbox, the tractor-mower you won't need, the draperies tailored to specific windows. This may be treated as a separate addendum.


Home Warranty. Why not help the buyer feel protected in buying your home? For as little as $300, you can provide a one-year warranty that covers all the home's major systems. Some programs even cover appliances.


Accommodations
Accommodations are small favors you can grant to the buyer of your home to overcome logistical obstacles.
Occupancy. Work out pre-occupancy or post-occupancy terms if date of occupancy is a problem for your buyer.


Move Out. Consider occupying temporary living quarters yourself, in order to let the buyer move in on schedule.


Pre-inspection. In older homes, head off inspection contingencies by offering proof of a recent home inspection, including roof and foundation inspection.


Storage. Offer to assist in any reasonable way with the buyer's problems in transferring household items (for example, storing things in your garage, accepting delivery of appliances, etc.).


Services. Mention the availability of continuing services of lawn care, home security systems or house cleaning (by prearrangement).


Loan Strategies
Buyers usually are not as concerned about price as they are about their monthly payment. If you can find a way to reduce monthly payments, you have the best chance of getting your top sales price. Here are some useful strategies:
Buy-down. Consider buying down the initial interest rate of serious purchasers so they can qualify for a loan. One of the many available buy-down plans might help your buyer and still let you come out with the net proceeds you want.


Assumption. If you have an assumable loan with a below-market interest rate, consider making it available to a solid purchaser. Check your lender's loan assumption requirements.


Take-back. You might even be in a position to offer the buyer a second mortgage by taking back some of the purchase price in a note.


Seller Financing. If you don't need immediate cash and your home is owned free and clear, you could think about holding the first mortgage, especially when mortgage rates are higher than money markets and CDs, and you can earn proceeds at above-market rates. Be sure the buyer is able to carry monthly payments and housing costs.


Lease/Purchase. Another option, if you don't need your funds immediately, is to let the buyer rent with a delayed settlement, provided you are sure the purchaser will eventually qualify for the loan. Part of the rental could apply toward the down payment.

Some of these selling strategies may seem excessive to you -- if you have not previously aimed for a top-dollar sale. However, we have seen them pay off many times and have learned which strategies work best under what circumstances. To find out more about effectively using sweeteners and counteroffers, just call us!