Even in today’s seller’s market with low inventory and high demand, home sellers in Louisville still need to carefully consider offers – beyond the dollar amount – and reject some. Some buyers are just too picky and have unrealistic expectations, others really aren’t qualified buyers, and still others include things in their offer that are cause for rejection. To help you out, then, here are 3 red flags home sellers in Louisville should watch out for.
1. Lack of Pre-approval and Too Little Earnest Money
One important red flags home sellers in Louisville should definitely be on the lookout for has to do with a buyer being unqualified or not serious or just a bad bet. The two primary indicators of this are a lack of pre-approval and an offer of too small of an earnest money deposit.
Most serious buyers, before they ever begin house hunting, will get pre-approved for a mortgage. Pre-approval is one of the top ways buyers can show sellers that they are capable of qualifying for a mortgage at the close of escrow. But if a buyer isn’t pre-approved you have no way of knowing whether the buyer can actually get financing to make the purchase. So an offer that isn’t accompanied by a pre-approval letter is a glaring red flag.
Here’s the advice industry experts have for home sellers in Louisville on this matter. “As a seller, you probably have an offer amount in mind that you would like the buyer to meet or exceed. But remember, a buyer needs to prove that he can afford to make the purchase – no matter what numbers are thrown around in an offer. If the buyer intends to get a mortgage, there should always be a pre-approval letter included in an offer on their lender’s letterhead.”
A related red flag for home sellers in Louisville (or anywhere else really) is an earnest money deposit that is just too small. Earnest money is the deposit the puts down when an offer has been accepted as a safety net for the seller. If the buyer backs out without just cause, then the seller can keep the earnest money as compensation for having to go all through the selling process again.
A small earnest money deposit likely indicates that the buyer isn’t really financially ready to make the purchase or that she really isn’t serious about it. To learn more about what an appropriate earnest money deposit should be (one that isn’t a red flag), contact a market_city] agent at (502) 536-9313.
2. Too Many Contingencies
Another glaring red flag for home sellers in Louisville is an offer with too many contingencies.
“In real estate, contingencies are benchmarks buyers set that need to be met for the transaction to continue moving forward. For example, many buyers will want to include an inspection contingency in the purchase contract. This means the buyer will need time to have your home inspected. And if any issues are found, a buyer might ask you to make repairs before he will close on the home.”
Such contingencies are common and to be expected. Cut when you see too many of them in an offer, that’s a red flag. “[A]nytime a contingency can’t be satisfied, the buyer has a chance to walk away from the purchase with his earnest money deposit in hand. Obviously, from a seller’s point of view, the fewer chances the buyer has to exit the transaction, the better. With that in mind, it’s a good idea for you to select an offer that has the fewest contingencies from the start. Choosing an offer with minimal contingencies is just as important as the sale price.”
But knowing when to reject an offer on the basis of too many contingencies requires skill and experience. So, again, it’s a good idea to consult a Louisville agent at (502) 536-9313 on this matter.
3. Slow Response/Contract Errors and an Unworkable Closing Timeline
It’s pretty standard that during the negotiations process the contract will pass back and forth between buyer and seller several times. Slow responses and delays on the buyer’s end are red flags for home sellers, as well as errors in the contract. Either or both of these can lead to a longer and more difficult selling process.
In addition, an unworkable or less-than-optimal closing timeline can be a red flag for home sellers in Louisville.
You should, industry experts say, “consider your optimal timeline for heading to the settlement table. Moving out is a lot of work, especially if you’ve lived in the home you’re selling for a while. To that end, you’re going to want to ensure that you choose an offer with a closing date that suits your needs. Timing is everything . . . While a quick closing is desirable to many sellers, some need more time to move. In that case, even an offer that has a lower sale price may be more desirable if the timing works better for them.”
Red-Flag Assistance for Home Sellers in Louisville
These are certainly some of the most important red flags home sellers should watch out for, but there are more, many more. An experienced local agent can help alert you to other red flags and so help you avoid selecting an undesirable offer. If, then, you are among the home sellers in Louisville who want to choose wisely, be sure to contact us today at (502) 536-9313.