You’ve got an offer on your Hawaii home. Now what?
You’ve spent weeks or months keeping your Hawaii property clean and staged for showings, and before that, lots of time, energy and money preparing the home for market. Your broker just called to say an offer has been received, and you’ll have it shortly. The buyer is asking for an answer in 24 hours. You need a plan to evaluate the offer.
First decide which terms are most important. For example, the closing date: do you plan a back-to-back closing? Do you want to close the Hawaii house you’re selling and the house you’re buying on the same day? Be careful! The new mortgage timeline requirements taking effect October 1, 2015 may make that improbable.
Regarding price, be sure to identify an acceptable price range before you receive the offer. That will make it a lot easier to evaluate the offered price as objectively as possible.
Your broker probably provided a blank sample purchase contract used by the local Hawaii Board of Realtors. What other “boiler plate” terms in this document are important to you?
If your house has only been on the market for a week or two, you may receive multiple offers. This is the receipt of more than one offer in quick succession. If you really have priced your Hawaii home to sell, at or slightly below market value, multiple offers are a possibility, especially in a rising market. Has your broker explained how multiple offers will handled? In West Hawaii it is customary for the seller to review all offers at the same time and select one with whom to negotiate. A second offer may be selected as a backup offer, assuming that buyer agrees.
This is a business transaction
Negotiating the sale of a home can be emotional. This is more so for primary residents, and much less so for investors. To the best of your ability, treat the negotiation and escrow process as a business transaction. If the offer is very low, don’t be offended. Just counter with terms acceptable to you and see what happens. If the buyer is only fishing, he’ll go away. If she really wants the house, she’ll step up with terms more acceptable to you.
Sometimes there are a few counter offers, back and forth. If you don’t need to sell right away, it’s okay to reject an offer and wait for the next buyer. However, if it’s been several months and this is your first offer, the market is providing feedback about overpricing. It may be in your best interest to lower expectations, unless you can wait for the market to come up to a price you need.
If this is the case, the best strategy may be to remove the property from market and allow time for appreciation. Is the local market falling? Then most definitely price your house under market in the very beginning. Don’t waste valuable time chasing the market down! That is the most painful way to sell a house.
Terms: real property fixtures vs personal property
Look for the section in the purchase agreement where the buyer declares what he assumes will come with the purchase. If there is no mention of the dining room chandelier, appliances, or window treatments, have your broker confirm in writing the buyer does not expect these items to stay. If the property will be sold furnished, what items currently in the unit will not stay? It is always best for all items not staying with the property to be removed before the property is initially released to market. Most brokers can share horror stories about personal property disputes.
Earnest money offered by buyers varies around the country. What’s considered acceptable in Alaska may be too low in Hawaii. Remember that if a buyer cancels the contract deep into the process by properly using any of the agreed contingencies, the seller won’t retain the earnest money.
Don’t be surprised by failed financing
The buyer’s financing contingency protects his earnest money and the right to cancel the purchase all the way through the agreed week of closing. Negotiate terms with your moving company so you are protected if this happens.
The secret to closing is flexibility
While your broker put a tremendous effort into marketing, getting into and through escrow can also require tremendous effort. Closings happen when both seller and buyer are able to accommodate new issues as they surface. And they will surface. Thankfully most unforeseen problems can be handled by professionals behind the scenes. When this is not the case, maintaining flexibility during escrow is your key to success.