When selling a home, every homeowner wants to do whatever they can to protect themselves from a bad deal. Because of this, it’s important that homeowners know what to be on the lookout for so they can reject bad deals before they can go too far. Here are some of the most important red flags sellers need to know and be able to look out for so they can help ensure they’re selling to someone who may cause troubles for them later on.
1. The Offer Has Too Many Contingencies
A contingency is a condition added to an offer on a home that says if something is wrong with the home or doesn’t meet a set standard, they’re allowed to back out of the deal without any penalty. It’s normal for buyers to use these three contingencies:
- Financing contingency, which ensures the buyer can back out if something happens that causes them to lose their mortgage.
- Appraisal contingency, which ensures the buyer is paying a fair amount of money for the home.
- Inspection contingency, which ensures the buyer can back out if the home isn’t in the advertised condition.
Beyond this, the buyer may include an extra contingency if they have a specific concern, but the real trouble comes when the buyer seems to be adding as many as they can think of.
2. The Buyer Is Pre-Qualified
Having a mortgage plan is extremely important when buying a new home, and it’s highly recommended that all buyers are pre-approved for their mortgage of choice before starting the hunt for a new home. However, some sellers may receive an offer from a buyer who is pre-qualified for a loan but not pre-approved, and these are very different things despite how similar they may sound.
Getting pre-approved for a loan is the first step buyers need to take in order to get their loan, and it involves an in-depth check into the buyer’s finances, credit history, and so on, and it can take days or weeks to complete. Meanwhile, getting pre-qualified just involves user-submitted information and can be done in just a few minutes online, so it isn’t official and may not be accurate.
3. The Buyer Offers Little Or No Earnest Money
When making an offer on a home, the buyer can offer what is known as earnest money. This is a cash payment put down on a home that the homeowner will get when the offer is accepted. The earnest money is typically not refundable should the buyer pull out of the agreement, so it’s important for the buyer to be certain they want the home. Because of this, many buyers use earnest money offers to show that they’re serious about buying a home—the higher the earnest money offer, the more the buyer has to lose should they go back on the deal.
When a Palmer home buyer has a small or nonexistent earnest money offer, it can be a sign that they aren’t truly committed to buying the home. A buyer who has nothing to lose has nothing keeping them in a deal should a home that they like better appears, so homeowners should always look for a healthy earnest money offer to help ensure they’re working with a serious buyer.
All homeowners need to be aware of red flags when selling their homes. No one wants to get involved in a deal that ends in failure, so keeping these warning signs in mind can be very helpful for all sellers.