Priscilla Toomey: Evaluating a Real Estate Offer
By Priscilla R. Toomey, Licensed Associate Real Estate Broker JD, ABR, Julia B. Fee Sotheby's International Realty
Mar. 29, 2017: These days, many homes being offered for sale on the market are receiving multiple offers. For a seller, evaluating them in comparison with one another is crucial. For a buyer, structuring an offer to best advantage versus the competition is equally crucial. But how do sellers and buyers accomplish that?
The essential elements of an offer are price and terms. Price is, of course, a number, but it needs to be evaluated in light of the terms to figure out what the buyer is actually paying and what the seller will walk away with at the closing table.
Terms consist of contingencies: an inspection, typically done before contract signing in this area, a mortgage commitment if the buyer plans on getting a mortgage, and a proposed closing date. The amount of equity versus mortgage is usually also part of the offer.
Some buyers, if they have expertise in property condition (builders, for example), might waive the inspection contingency. However, it is prudent for virtually every buyer to have a thorough engineering inspection to have a handle on what they are buying.
With respect to mortgages, some buyers say they'll pay "all cash." As we have discussed in previous articles, "cash is king," and the more cash, the easier it is for the property to appraise out at its contract price or, if the offer is for all cash, the faster the contract will become non-contingent and thus the sooner the seller will feel comfortable committing to the purchase of another property.
But keep in mind that while "all cash" may actually mean just that, it often means that the buyer is, instead, taking the risk of getting a mortgage commitment and of the property appraising out and not making the offer contingent on those factors. So, in reality, there may be an appraisal and a mortgage involved and these may affect the timing. It's important to ask.
Another term is the proposed closing date. Often in an offer, it's stated to be at the preference of one party or the other. It is unwise to agree to a closing too far in the future (more than 90 days from the date the contracts are signed by both parties, for example). That's because things can happen over time to change people's circumstances and sometimes those changes can put the transaction in jeopardy.
As you can see, there are many details to consider when reviewing an offer--but attention to detail is key and will lead to the success of your transaction.
Pictured here: Priscilla Toomey, licensed associate real estate broker, JD, ABR, Top5, certified EcoBroker, SRES with Julia B. Fee/Sotheby's International Realty, 2 Park Place, Bronxville, NY 10708; cell, 914-559-8084; email,
Photo courtesy Julia B. Fee/Sotheby's International Realty
