5 Things to Look Out for When Accepting Real Estate Offers

 Posted on October 30, 2024 in Real Estate

Selling real estate can be a complex and drawn-out process. Some properties sit on listings for years before receiving viable offers. A seller might be tempted, therefore, to accept the first offer that comes in or one that meets the asking price even though there are red flags. However, sellers should remember that price is only one aspect of a real estate sale. There are legal nuances of the process that should be carefully reviewed by a Connecticut real estate attorney.

Here are five things sellers should look out for when accepting real estate offers.

Low Earnest Money Can Signal Low Interest

It is common for potential buyers to place an earnest money deposit when extending an offer on a property. This deposit, which is placed in escrow until the deal is closed, signals that the buyer is tendering the offer in good faith. In the real estate market, earnest money is typically around one percent to three percent of the asking price. If a buyer deposits earnest money below one percent, it may be a sign that he or she has low interest or is not serious about the offer.

Be Wary of Blind Offers

Sellers occasionally receive blind offers where the prospective buyer does not view the property in person. While some of these offers may be legitimate, it may also lead to complications. Interested buyers who do not inspect the property or even conduct a walkthrough are more likely to be "surprised" by details about the property and back out of the deal. A blind offer may also signal that the potential buyer is not serious about purchasing the property.

Negotiate Repairs With Care

After an interested buyer has the property inspected, he or she may ask the seller to pay for any necessary repairs. These may include:

• Fixing or installing plumbing or electrical systems
• Roofing repairs
• Installing water heating

Some sellers honor these requests by paying for the repairs, while others offer a reduction in the sale price — referred to as a price credit — in exchange for the buyer paying for the improvements. Take special care when negotiating repairs and price credits so they do not impact your profits more than necessary.

Confirm the Buyer’s Financial Standing

When reviewing an offer, make sure to investigate the prospective buyer’s financial situation. If he or she has a low credit score and shows signs of financial instability, you may want to consider declining the offer. On the other hand, a potential buyer who has been pre-approved for a mortgage could be a sign to move forward.

Watch Out for Escalation Clauses

Some buyers include escalation clauses in the purchase agreement, which automatically increases their bid if the seller receives a higher offer. While this might be a good idea in cases where time is not a pressing factor, it can draw out and complicate the sale process. Discuss with your attorney whether an escalation clause is beneficial in your case.

Contact a Greenwich, CT Real Estate Attorney

There are many nuances and factors to consider when selling real estate, which is why any sale should involve Ivey, Barnum & O'Mara, LLC. Involving an experienced Metro New York Area real estate lawyer from the beginning can make the process smoother and protect your financial interests. Schedule a free consultation with one of our excellent attorneys by calling 203-661-6000 now.