Home Sale Challenges in a Tight Market
Hard to believe after the events of the real estate crash, but there are now many markets within the US that are in high demand, but have low inventory. When selling a home in one of these areas, it is very likely that the seller will receive multiple offers. This creates a challenging situation for a buyer as they must be pre-approved for a loan, but also have a reserve of cash, or better yet, be an all cash buyer. Buyers have reported that in order to be successful in purchasing a home in one of these markets, they must be prepared to offer as much as $100,000 over list price. The subsequent challenge is to ensure that the home appraises at the sale price, if the buyer is obtaining a mortgage.
The next challenge to the Relocation Management Company is to ensure that the Corporate Client does not incur a loss if the home does not appraise. The first priority of the Relocation Counselor is to know the market, work closely with the listing agent, and to be prepared to assist the homeowner during the negotiation process. The Counselor will conduct due diligence once an offer is presented to verify that the offer is “bona fide” – that it is not contingent on selling a home and the buyer has been pre-approved for the necessary funding needed to close, if obtaining a mortgage. If the best offer has come in over the list price, one of the most successful ways of protecting the transferee and the Corporate Client is to insert a clause into the sales contract stating that if the home does not appraise at the negotiated sales price, then the buyer will pay the difference in cash. There will be no further price negotiation and available funds must be verified before the contract is ratified. It is highly recommended that the buyer discuss this strategy with their mortgage lender before submitting offers.
In closing, being afforded a BVO or GBO home sale program is a valuable benefit for the Transferee. And with proper planning and negotiation guidance, an offer driven by supply and demand can be a bona fide one.