Top 5 Mistakes Home Sellers Make and How to Avoid Them
Selling a home can be both exciting and daunting. Throughout the process, there are numerous legal considerations to keep in mind, and even minor errors can have serious consequences. In this blog post, we will highlight the top five mistakes made by home sellers and provide advice on how to avoid them.
1) Accepting the Buyer with the Highest Offer Regardless of the Other Contractual Terms
Many home sellers are drawn to the buyer who offers the highest price for their property. However, before accepting the offer, it is critical to consider all of its other terms. A buyer, for example, may offer a higher price but request a longer escrow period or require the seller to pay all closing costs.
Sellers should carefully review all the terms of the offer and consider negotiating with the buyer to ensure that the agreement is fair and favorable for both parties.
2) Not Handling Multiple Buyer Offers Properly
If there are multiple buyers interested in the property, it is critical to carefully handle their offers. Sellers should consider making a counteroffer to each of them in order to present their best offer. Sellers should also inform all buyers that they are considering multiple offers and set a deadline for them to submit their highest and best offer. Check out our other post on how to survive multiple offer situation.
3) Not Managing Back-Up Offers Properly
When a seller accepts an offer, it is common for other buyers to submit backup offers in the event that the initial deal falls through. Back-up offers should be considered by sellers, but they must be handled carefully. It is important to notify the backup buyer that their offer is not being considered at this time and that they will be contacted if the primary deal falls through.
4) Entering into a Contract with a Minimal Earnest Money Deposit from the Buyer
Earnest money is a deposit paid by the buyer to demonstrate their commitment to the sale. If the sale is completed, the earnest money is applied to the purchase price. If the sale fails due to the buyer’s fault, the earnest money may be forfeited to the seller based on the contractual terms and contingencies. It is important to request a sufficient earnest money deposit from the buyer to ensure that they are serious about the purchase and to cover any damages suffered by the seller if the sale falls through.
5) Entering into a contract before confirming the buyer’s financial ability to close escrow
Before accepting an offer, ensure that the buyer has the financial ability to close escrow. This involves a review of their credit history, employment status, and available funds for a down payment and closing costs by their lender. To avoid any potential issues during escrow, sellers should consider working with a real estate agent and have the agent be in touch with the buyer’s lender to make sure the buyer is financially stable to purchase the home.
To summarize, selling a home is a complex process that must be approached with careful consideration. Sellers can increase their chances of a successful sale and reduce their legal risks by avoiding the top five legal mistakes. If in doubt, consult with a real estate attorney or experienced real estate agent to ensure that everything is done correctly and legally.
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