Consider the Risk, not just the Price when Selling
Last month we reviewed factors to consider other than price that affect the net amount a seller receives when accepting a purchase agreement on a home. Just as important as price is the amount of risk involved in a sale. The more risk involved in an offer, the less appealing it becomes.
The most common risks involved in a sale are the inspections. A home inspection is typical, nearly every buyer will do one. Do not underestimate the value of an offer in which a buyer does not wish to do an inspection. It is very rare that an inspection is done and issues are not found. The expense of repairing these issues will cut into a seller's bottom line or the defects found could cause a buyer to back out of the purchase. A radon test introduces a very measurable risk. In my experience about half of all radon tests performed in the Omaha area come back with results higher than the EPA safe limit and as a result need mitigation. The cost of mitigation nearly always falls between $700 to $800.
Another less common but riskier contingency is that the buyer needs to sell their home first. The amount of risk in this situation depends on whether their home is already under contract and if so whether the inspections have been completed and repairs agreed upon. Even if these hurdles have been passed it doesn't mean that the risk has been eliminated. If the sale of the buyer's home were to fall through for another reason, then so would the sale of the home they are buying.
An often overlooked source of rish is the closing date. The further into the future the closing date is, the more time there is for problems to arise. I once had a buyer die before closing. Obviously this sale did not go through and my sellers had to wait for another offer. While this is an extreme example, it does illustrate that a distant closing date creates unforeseen risk.
Finally if the buyer is financing the purchase, then the offer will be contingent upon their financing. If something happens to cause the buyer's financing to be denied - job loss, change in credit score - then the sale will be cancelled. This can happen even when a buyer is pre-approved for their loan.
Risk, while often overlooked, needs to be considered along with price when accepting an offer to sell a home. A higher price may justify accepting an offer with greater risk, however if the sale does not close then the higher price means nothing.
