How to Sell Your NYC Home
The pandemic certainly shook up the New York City real estate market, but recent data reveals that the sales market is returning, which is great news for home sellers. So, with the potential for offers to pour in, what do sellers look for in an offer? Well, the best answer to that question is to take a step back. Before entertaining any offer, it’s crucial to explore your selling options and price your home right. Your selling price should be comparable to sold homes in your building or the neighborhood. Afterward, you should be entertaining offers! Here’s what you should know about choosing the best one.
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What Does Contingent Mean In Real Estate?
When it comes to what do sellers look for in an offer, understanding how this term impacts the sales process is essential. Simply put, contingent means “depending upon certain circumstances.” Both buyers and sellers can establish contingency clauses, which spell out an action or condition that must be met before binding a real estate contract.
Homebuyers may make an offer contingent on securing a mortgage or an inspection that doesn’t reveal significant structural issues. If a condition isn’t met within an agreed period, the buyer has the right to exercise their contingency: cancel the contract and receive their deposit back.
“While contingencies reduce the risk for the buyer, they increase the risk for the seller that the deal doesn’t close,” says Jared Antin, Director of Sales & Associate Real Estate Broker at Elegran. “In a seller’s market, like NYC is experiencing now, sellers are less inclined to accept a deal with one or more contingencies.”
But, just because an offer doesn’t have contingencies doesn’t mean it’s better. For example, a contingency clause can help a homeowner sell quicker. A seller could ask a buyer to wave contingencies for a lower offer.
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What Should Home Sellers Know About Cash Offers?
What do sellers look for in an offer? All cash, right? However, the phrase cash offer in real estate has two different meanings. Essentially, a cash offer means it’s not contingent upon financing.
“Many buyers presenting cash offers plan to secure financing,” said Kevin Sneddon, top broker and founder of The Private Client team at Compass. “But they can’t get out of the deal without losing their deposit if they are not able to close on their purchase.” Why? Deals like these, as just mentioned, are not contingent on financing.
Some buyers make genuine cash offers using the money they already have on hand. But don’t expect the buyer to bring suitcases full of cash to the closing. In these instances, buyers usually present proof of funds, according to Sneddon.
Not surprisingly, the latter is often the preferred route when determining an offer because it removes the mortgage process with banks. Plus, it decreases the time it takes from contract signing to closing. Even better, there are usually no contingencies with a cash deal, so it minimizes the risk of the deal not closing once the contract is signed, according to Antin. Additionally, if the deal doesn’t close, the seller may have the right to keep the buyer’s deposit.
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Is The Highest Offer The Best Offer?
Several factors determine the answer for choosing the best home offer — that means the highest one is not always the best.
“For instance, if the seller needs to close within 30-days to secure their next purchase, then the seller may prefer to accept a cash offer that is slightly lower in price than a non-contingent financing offer. As a result, the cash buyer will be able to close quicker,” said Antin.
The same is true for the number of contingencies. According to Sneddon, since contingent offers take longer to close, a seller might opt for a lower offer without them to close the deal faster.
“The essential thing to know when considering what do sellers look for in an offer is that the best one in many occasions is a combination of price, risk (contingencies requested by the buyer), and timeframe,” said Antin. “Ultimately, the best offer is the offer that best accomplishes the seller’s goals.”
How Do Sellers Choose An Offer If They Have Multiple Offers?
If you’ve priced your home well, you will know it. You will get immediate requests for showings, second showings, and a busy open house. So you need to capitalize on early activity.
A good strategy is to ask for a “best and final” offer, which means that all interested buyers must come with their best offer on a specific date. Give buyers enough time to see the apartment, plan their offers and present you with their best and final offer. Buyers will understand that this is their one and last chance to get the apartment. And the process may make it easier for you to choose the best offer out of many.
What If Two Offers Have Similar Terms And Price?
How do sellers choose an offer if they’re nearly identical? If the terms are the same — say two cash offers at the same price — and you’ve gone to best and final, then you need to make a decision.
If you own a co-op, you need to look at the financials of each buyer and ascertain which buyer will be more likely to get past the board. Look for things like income, debt, and assets to see which buyer is stronger. But if all else is equal, you need to figure out which buyer is more serious. Given that buyers can walk away from when they get their offer accepted and sign a contract, it’s not uncommon for remorse to pop up — buyers sometimes get cold feet. So let the chosen buyer know that they have a limited time (seven days is appropriate) to get a signed contract back to you. If they don’t, go to the backup buyer.
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Why Home Sellers Must Keep Fair Housing Laws in Mind
When it’s a seller’s market, buyers will go to great lengths to stand out. But, home sellers can accidentally fall into the discrimination trap.
“While some buyers like to write heartfelt letters to the seller along with their offers, sellers shouldn’t read them, as it may influence which buyer’s offer to accept and that may go against the fair housing laws, which protects people from discrimination,” said Antin.
So, when determining how sellers choose an offer, it is essential to accept the best offer for them and their situation without considering the characteristics of the prospective buyer.
Ultimately, if you’re in the position where you are trying to decide which offer to accept, you have a good problem on your hands. Just remember that during the process, it’s important that sellers and their real estate advisors adhere to all local, state, and national fair housing laws and make a decision that’s best for your goals.