When you're selling your Panorama Hills home, one of the most important things you can do is choose your buyer wisely. The money the buyer offers is not the only factor to take into consideration. Analyzing the offer, you can tell a lot about the person who is trying to buy the property.
Sometimes, you can even identify red flags that can be an indication that the home buyer is going to be difficult to work with. The following red flags should be noted on an offer, especially when they appear in tandem.
Pre-Qualified, Not Pre-Approved
Pre-qualification is the first step of the mortgage application process. To become pre-qualified, the buyer must answer some questions about their financial status. The mortgage lender then tells the buyer how much they would be qualified to borrow, assuming the information provided was accurate.
Pre-approval is a lengthy process that requires the buyer to provide supporting documentation about their financial situation. Pre-approval enables the lender to determine with more accuracy whether the buyer would be able to borrow the money to purchase a house.
A buyer who is pre-qualified may be denied a loan later in the lending process, and thus may not be a very good candidate to purchase a home. A buyer who is pre-approved is more likely to get the home loan they've applied for, and thus may be a good candidate.
Requesting Many Repairs Up Front
It's common for buyers to request a few repairs after the home inspection. However, a buyer who requests excessive repairs either before or after the home inspection could be a buyer who will be difficult to satisfy.
Excessive Use of Contingency Clauses
Many home buyers include contingency clauses in their home offer. Common contingency clauses include:
- Appraisal contingency. This contingency allows the home buyer to back out of the offer if the home is not worth the proper amount.
- Inspection contingency. This contingency enables the home buyer to cancel the purchase if the home inspection shows there are serious maintenance problems with the house.
- Financial contingency. The financial contingency allows the home buyer to cancel the purchase of the home if the loan does not fund.
There are other contingencies, but they are used less by home buyers. A home buyer who includes many other contingencies to protect themselves during the home buying process could be a buyer who is afraid to commit to the purchase of the home. The buyer may be looking for a trap door to let themselves out of the purchase, if they want it.
Low Earnest Money Check
The earnest money check is a check that the buyer writes to the seller at the beginning of the home buying process. Once the purchase contract is signed by both parties, the funds from the earnest money check are placed in an escrow account. If the home buyer backs out of the home buying process at the wrong time, the earnest money check is given to the seller.
Earnest money is intended to show the seller that the buyer is serious about the purchase of the home. If the buyer writes a low earnest money check, this could be an indication that the buyer anticipates they will want to back out during the buying process.
Work With a Real Estate Professional
If you're a home seller who would like to protect yourself from problems during the home selling process, work with a real estate professional. A good real estate agent can help you identify red flags, and can help you decide which buyer is right for you.