A machinist and his homemaker wife, both in their early 40s, had long been planning to sell their fully renovated Craftsman-style house to build a bigger, custom place on a rustic country lot. But they held off until autumn, waiting for perfect selling conditions in their area.
Their timing was just right.
Within a couple of days after their place went on the market, the couple bagged two offers, each for their full asking price, which gave them leverage when they made a counteroffer.
"Besides a good price, the sellers really wanted to remain in their house until the new place was totally move-in ready. Through good planning, they closed on their sale and now have the right to stay for up to 90 more days at a very nominal rent," says James "JJ" Godi, a real estate broker involved in the deal.
This story illustrates how sellers can often shape an offer to their liking, without pushing so hard as to alienate prospective buyers, says Fred Meyer, an appraiser and real estate broker who sells property near Harvard University.
Can all sellers act as demanding as the machinist and his wife?
"That depends on how much leverage they have in their market. The sellers' strategy has to be appropriate for market conditions," Meyer says.
Here are a few pointers:
-- Don't solicit advice on an offer from friends in your neighborhood.
Some sellers are inclined to ask neighbors to review a bid before deciding how to respond.
But Meyer cautions that most of your neighbors will probably lack the up-to-date information needed to guide you. What's more, they may be biased in their thinking and overestimate the value of the property.
Godi says a trustworthy real estate agent is typically your best source for sage counsel when you're attempting to ensure that a bid on your home is up to its true market value and that all the clauses in the document are acceptable.
"I go line-by-line through any offers my sellers receive," Godi says.
As he notes, each year so-called "standard" sales contracts become more complex and lengthy, as more mandatory disclosures are added. Yet often the most troublesome provisions involve nonstandard language.
"You have to be especially careful with handwritten clauses that are inserted in a sales contract by buyers or their agent," Godi says.
He advises those seeking a second opinion on a bid to have it reviewed by a lawyer who specializes in real estate.
"You don't want an attorney who does divorces or bankruptcies doing your real estate transactions. You need someone who really knows real estate law," Godi says.
However, he says you probably won't want your lawyer directly involved in negotiations with potential purchasers. The problem with that is that your buyers may think they also need an attorney, which can lead to an adversarial situation that might ruin your deal, he says.
-- Beware of special conditions attached to an offer.
In areas where demand for homes outstrips supply, Meyer says it's rare for potential buyers to risk making their offer conditional on finding a buyer for their own property.
But sometimes -- even in a hot seller's market --buyers may attempt to make an offer contingent on the closing of a pending deal for the sale of their current home. Even this provision can prove problematic, Meyer says.
Prior to signing such an offer, he recommends you ask your listing agent to obtain a copy of the contract for your buyers' deal to ensure that all the appraisal and home inspection issues have been resolved. Also, try to find out if firm financing is in place.
Remember that if your buyers' deal falls apart, the domino effect could topple your deal too.
-- Make doubly sure your buyers' financing plans are solid.
Accompanying any good contract offer for your home should be a letter stating that the would-be purchasers have been pre-approved for a mortgage. That means an established lender has not only checked their credit reports but has verified that they possess the wherewithal to purchase a place.
"What you need is proof that the buyers have the necessary income and assets," Godi says.
Nowadays, the terms "pre-approved" and "pre-qualified" are often used interchangeably. But, as Godi says, a pre-qualification letter "isn't worth the paper it's written on." That's because the borrowers have yet to give the lender the bank statements, W-2s and pay stubs needed to show they can afford your home.
Even a pre-approval letter is not a watertight guarantee that the lender will fund a mortgage for a particular set of buyers.
To protect his sellers, Godi routinely calls the lender who's signed a pre-approval letter to ask about the buyers' financial status.
If the lender gives vague or general answers to his questions, Godi says he goes a step further and requests actual copies of the buyers' documents, including tax returns.
"You've got to be sure any buyers who wish to purchase your place, including cash buyers, have all their financial ducks in a row. Otherwise, what seems like a wonderful deal could totally collapse," he says.
(To contact Ellen James Martin, email her at email@example.com.)