For those selling an Austin home, the real estate market is particularly sunny. In fact, multiple-offer situations are common in Texas' capital city. But those evaluating multiple offers must be on the hunt for possible drawbacks. After all, some deals are weaker than others.
"It's not always about price; that's a driver and a factor, but you want to consider the other terms of the offer," says Brandy Guthrie, Realtor at Sky Realty and president of the Austin Board of Realtors. "Look at the offer as a full picture, take into consideration all the components and find the one that best fits your needs."
Before you accept an offer on your house, a few of Austin's top real estate agents, as identified by real estate technology company Agent Explore (a U.S. News partner), say to look for these red flags that could take your home from "sold" to "back on the market."
A prequalification letter instead of a preapproval letter
Although receiving a prequalification letter sounds like a plus, it isn't as strong as receiving a preapproval letter. If you're unsure about a prequalification letter's worthiness, ask your agent about the lender. Your agent can also reach out to the lender to ask about the potential buyer's ability to purchase.
"Visit the lender to ensure they've gone through the necessary steps to get an actual approval, not just a prequalification letter," Guthrie says. "The difference is with a prequalification letter, they've looked at the buyer's credit, but with a preapproval letter, they've received their documents, verified income and verified assets so it holds more weight."
As a seller, you want a financially sound buyer whose offer doesn't raise concerns about his or her ability to complete the transaction. Having a preapproval letter over a prequalification letter will eliminate variables and make the process easier.
A home sale contingency
"The buyer already has the ability to terminate for any reason because of the option period, so if you have other contingencies like the sale of another home, that to me is a red flag," says Ben Caballero, CEO and president of HomesUSA.com. "If you have multiple offers, I wouldn't even consider that sort of thing, no matter what the price is."
If the offer includes a contingency like the sale of the buyer's home, strongly consider reviewing other offers. Although the buyer may say his or her home will close in a short period of time, any change could kill your sale.
A slow closing timeline
"If someone doesn't want to close for two months, why? And does the answer make sense and do you want to take that risk?" Caballero says. "Things like accidents, divorce or job loss can happen, and you want to close as quickly as possible to eliminate the potential for a problem to arise."
Don't be shy about asking your agent for clarification as to why the buyer wants an extended closing date. You need to be comfortable with the deal and if you're unsure or wary about the wording or timetable, reach out to your agent with questions.
Guthrie recommends looking at the timeline within the offer to ensure the seller is protected. She says a real estate agent should be able to point out potential risks to determine which offer is best or whether there needs to be a counter offer. Making sure the closing timeline is beneficial to you, the seller, before you accept an offer is a good way to secure your home's sale.
A long option period with a minimal option fee
Having a long option period when the buyer has the right to terminate the contract for any reason increases your chance of having your home sale fall through. "You don't want the property tied up with the ability for a buyer to cancel and then miss out on other potential buyers," Guthrie says. "The least amount of time the property is held during the option period is best because it's more likely to move forward."
You want your option period to be as short as possible -- Caballero says anything over 10 days should feel suspicious. Additionally, if the buyer offers a tiny option fee, such as $50 to $75, that's another red flag. "Why are they offering such a low fee since it'll be applied to the sales price? They're either looking at multiple properties or they're investors who are just going to flip the property," Caballero explains.
Both expert real estate agents agree, though, that every seller is unique and each offer must be evaluated based on how well it meets the seller's needs. Create a spreadsheet to look at the variables, like price, closing date, contingencies and down payment, to make it clear who the best buyer for your home is. But, if, despite your due diligence, the deal falls through, get a release of the contract and get the home back on the market as soon as possible.
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