Accepting an Offer on Your Property: Hidden Pitfalls
Accepting an Offer
Accepting an offer is only one step in the sale process and now the real work begins. It is tempting to relax and take the foot off the accelerator, safe in the knowledge you no longer have complete strangers walking through your front door. However, this is the time to stay focussed and keep on top of things, including asking for regular updates from your solicitor.
Remember that, the more you wait, the less desirable your property will be to buyers. It is tempting for a first-time house vendor to wait until the best offer comes along, but what if it never comes? You may have a figure in mind, and you may have calculated how much you will need in order to buy your next property, but what if no one can match the asking price?
The difference between waiting for the right offer and accepting a reasonable offer can be that six months go by before you can take the property off the market.
Sometimes, the very first offer you receive is the highest and waiting for more buyers can result in lower offers. While it is unwise to rush into accepting the first offer that comes along, a waiting game hardly pays off. As long as the asking price is set at market rate and not above it, your property shouldn’t be left on the shelf for long.
Is the first offer you receive the best offer then? Traditional estate agents will tell you to accept the first offer as they will need a quick turnaround. If you close the deal in a short timeframe, the estate agents will get their commission sooner. However, you are not working for your estate agent: the estate agent works for you and should have your best interest in mind. If you use an online estate agent ask them to advise you on how to make counteroffers and, most importantly, let them represent you. Their job is to take on the stress of negotiating. The key element to consider is the buyer’s financial position. When you are considering different offers, a cash buyer will be able to proceed faster than a buyer who has to apply for a mortgage.
Investors tend to start their bids from very low offers and they tend to have already set their maximum budget below asking price. These types of buyers always believe that asking prices are inflated so they will start their bid at 20% or 10% below asking price. Of those investors who are cash buyers, some of them can be quite aggressive in trying to get you to accept their low offer, on the basis that, being cash buyers, they should take priority over buyers with a mortgage. A few of such cash buyers may even try to make you capitulate to accept their offer saying that you wouldn’t realistically be able to fetch any more than their final price.
In some cases, you may set a new benchmark for house prices in your neighbourhood if you sell at asking price and other properties may follow. It is therefore entirely your decision whether to accept a reasonable cash offer or an offer from a buyer applying for a mortgage and proceed, or wait for something better to come along, always bearing in mind that the market could stagnate and you may not be receiving any further offers. Remember that the market for your property is at its most dynamic during the first two weeks from listing.
Is The Highest Offer Always The Best Offer?
Let’s ask ourselves a different question: is the highest offer always the best? Not necessarily, because the buyer may need to organise a mortgage and there might be some problems along the way with the issuing bank, or the buyer might be in a chain, which will delay the sale process. Moreover, nothing will stop the buyer from looking at other properties even after you have accepted their offer. There is always a risk that the buyer may pull out. It has in fact become quite common for house buyers to keep looking at other houses after they've already made an offer on one property.
Your estate agent will liase with your buyer and advise you on the negotiation. It may take three to five phone calls to meet halfway with your buyer to agree on a price that is satisfactory for both vendor and buyer. If you are dealing with an investor, be prepared for a very low initial offer. For example, sometimes, busy investors make blind bids to gauge whether the price is flexible: a blind offer means that the potential buyer makes an offer before viewing the property in person. In the negotiation, getting the buyer to make a higher offer can be challenging and they may only go up by small increments. Make sure you don’t go below the lowest limit you would accept, otherwise you won’t be able to buy your next home. In the heat of the moment you may feel pressurised into accepting a low offer simply because you are in a hurry or the whole process is causing you stress and anxiety. This is where your agent will demonstrate they are worth your money: they will advise you against pursuing a deal that would be detrimental for you. It will be hard to stay firm in your resolution, especially if you need to leave your current property for personal reasons (for example, because of debt problems). You only get one chance to sell your first property so you need to get as much equity as possible from the transaction, within the parameters of average house prices in your area.
When it comes to accepting the right offer, the negotiation process is a fine balance between getting the best price for you while letting the buyer think he/she is getting the best deal possible. Of course, there is an element of compromise on both sides and the final price should be a win/win situation for both parties. In the big scheme of things, if you are feeling uncomfortable after accepting an offer that is lower than your ideal price, remember that the flipside to it is an unsold property.
What to Do If Things Fall Through
Sometimes buyers change their mind, or their financial circumstances change, or they have found another property, and decided they prefer it to yours. Maybe they need to relocate to another town at short notice. There are many reasons why a buyer may no longer want or need to buy your flat. You need to be mentally prepared for any scenario available to avoid getting too stressed out.
It is not unusual for the buyer to get cold feet. Buying your first home is daunting, and the thought of having to pay a mortgage for the next 30 years will give you sleepless nights. While this is totally understandable (and you probably had cold sweats when you bought your own property), it is extremely irritating when a buyer disappears or is no longer interested in your property. It can happen that a buyer will stop answering the estate agent’s calls. In theory you have sold your flat to this buyer and are waiting to start the whole paper trail. No matter how many times the estate agent gets in touch with your potential buyer, there is no answer. Your flat is no longer on the market and you have no viewings lined up. You may have started packing all your belongings and the flat may have started to look bare. Maybe you have put an offer on a flat you like because your home is under offer. If the owner of your dream home is in a rush to move, you may have to say farewell to that property and search for another one. As frustrating as this all can be, you now have to start all over again. Unpack your staff, relist your home and get ready for more viewings.
When you relist your property, do not say “back on the market” on the actual listing because it will raise suspicions: buyers will ask you what is wrong with your flat and what the potential buyer discovered that was so bad that it made your property undesirable.
If someone has seen your property before, either online or in person, and now has come back to check on your property and wants to find out what happened, just explain that there was a situation that was beyond your control and nobody was at fault. Your estate agent will advise you on what to say and what not to say.
The main challenge you will have to face is to keep the motivation going. More people will come through your front door, more cleaning will be required and you will once again need to cancel social events in the evenings to clear up your diary for viewings. As long as you keep in mind your end goal of selling your home, these will all be small sacrifices (but you are entitled to get annoyed if you cancelled on a night out for a viewing and you get a no show from a potential buyer).
Some people will use the disappearing act strategy (or "ghosting") to move on to pursuing another property without letting you know.
Some buyers will also use tricks to make you lower your asking price before exchanging contracts. For example, they may ask you to inspect the property again and will look out for any faults, giving them an excuse to push you into accepting a lower offer before signing all the paperwork.
Sit Down and Make a Decision
At some point, you will need to make a decision: is your priority to move out of your current home because of urgent personal reasons or do you need to achieve the highest bid on your property?
If you want to pay off your mortgage or use the equity from the sale to finance a round the world trip, you may want to be patient and wait until the right buyer makes the right offer.
If you are moving to a different country for work, of if you have other personal circumstances that require you to leave your home as a matter of urgency, then you may need to settle for a slightly lower offer from a buyer who can complete within a short timeframe.
However, you need to remember that even those buyers who look great on paper (for example, they have no chain and are paying cash) may pull out of the deal and the sale falls through.