Sellers Beware

I recently had a listing that was getting a lot of showings. This was due to a variety of reasons including, but not limited to a slightly higher commission paid by the seller. Let’s face it. All other things being equal, it is human nature to show the property that pays you the most. There was an agent that insisted that their buyer could get financing, but also thought that it would not appraise for the contract price. In this scenario, the seller needs to consider the following:

  • This is not a cash offer and could take twice as long to close. A cash offer can close in two to two and half weeks.
  • Some types of financing require the seller to pay for items even if the property is offered on “as is” basis. For example, VA requires that the seller paid for the termite inspection.
  • Most offers with either VA or FHA financing ask for closing costs (i.e. 3% of sales price).
  • If it does not appraise, the buyer and seller will have to negotiate with the buyer to make up the difference, or the seller reducing the price, or even a combination of both.
  • The seller could give in to the demands since they have already put their plans in motion, and don’t want to risk putting the home back on the market.
  • The seller also has to consider the holding costs associated with a long closing (i.e. real estate taxes, insurance, HOA fees, mortgage payments, maintenance, utilities, etc.)

The above factors are just some of the reasons that a seller must consider in accepting an offer.  In my opinion, cash is king and eliminates the downside risk in terms of both out of pocket costs and time to close.  However, cash offers typically come at a cost with a lower offer than a typical offer with financing.  A good listing agent can discuss the merits and demerits of each offer with their seller.

In today’s market, a lot of listing agents ask for an offer to written on “as is” contract in Florida. I guess this is a function of where we are in the business cycle. Is the “as is” contract good for property owners? In my opinion the answer is maybe. In our market, it is not uncommon for investors to put offers on numerous properties without even looking at the properties. With a typical inspection period of 15 days, this essentially ties the property up until they can look at the property. The seller likes the limited downside of an ”as is” contract, which limits the seller’s out of pocket costs and the seller is not contractually obligated to make any repairs that come up during inspections. The FAR BAR “AS IS” contract has its place as a tool for both buyers and a sellers. Although the seller is not contractually obligated to make any repairs that may come up during inspections, everything is negotiable. This is especially true if the inspections are completed prior to the inspection deadline. Timing is everything!!! When you have a qualified buyer that wants to buy and a seller who wants to sell it usually works out.

If you are interested in buying a new home or an existing home, please contact me (Alan Lane with Keller Williams Realty at 2119 W Brandon Blvd, Brandon, Florida  33511) and I can help you find a new home in the Tampa Bay Area.  The Keller Williams offices of  ”Suburban Tampa” include the offices in Brandon, Plant City, Fishhawk Ranch, and our newest office in Valrico.  My email address is alanlane66@gmail.com, or call me at 813.205.9280.  If you are just starting your search, you can search the MLS for homes on my website at this link.

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