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Analyzing Real Estate Offers

Ocean City, Maryland Real Estate Offers

There is a lot to consider and account for when analyzing offers as the Seller of real estate in Ocean City, Maryland and the surrounding areas.  While price is typically the most important factor, there are several other important factors to consider.  Contract contingencies, closing costs, contract timeframes and Buyer qualifications will all have a significant impact on the deal you ultimately secure and the overall flow of the transaction.  Listed below is an overview of the key items to consider and what to look for when analyzing real estate offers for the sale of your Ocean City home or condo.

Offer Price

Price is typically the most important factor when selling an Ocean City home or condo.  With that being said, due diligence must be performed to ensure the offer price can be delivered upon by the Buyer and substantiated by an appraisal if an appraisal contingency is part of the contract.  You will also want to ensure that none of the contract contingencies or Buyer requests will substantially reduce the offer price outside of the customary sell-side costs associated with an Ocean City real estate sale.  The real estate agent you are working with should provide you with a detailed breakdown of the offer outlining the offer price, all costs associated with the respective offer and your estimated net proceeds.

Contract Contingencies

Aside from the offer price, contract contingencies will have the most significant impact on the amount you ultimately net from the sale and the overall real estate transaction itself.  Typical contract contingencies in the Ocean City real estate market include property inspections, financing and homeowner association reviews.  Contract contingencies will be limited in Seller's markets and more prevalent in Buyer's markets.  Each contract contingency should be evaluated in light of the offer price, current real estate market conditions, the Buyer's qualification and motivation, the property's condition and your particular situation and goals with the property sale.  An experienced Ocean City Realtor should be able to manage and balance the contract contingencies so the Buyer feels comfortable with the overall deal and you as the Seller are protected with limited financial liability and headaches.      

Closing Costs

How the Buyer is proposing to handle the closing costs in the offer will have an impact on the net proceeds you ultimately receive from the sale.  When your Realtor presents the offer to you it should include a detailed summary of all of the applicable closing costs.  Typical closing costs when you are selling a property include the real estate commissions you agreed to when you listed the property, nominal title company charges and half of the transfer and recordation costs, which is customary in the Ocean City real estate market.  Buyers may request closing cost assistance in their offer, but this is rare in second home real estate markets like Ocean City, Maryland.  Closing cost assistance has its place in some real estate deals when it is utilized in the interest of getting a deal done, but it must be reviewed carefully as it will have an impact on the offer price, your net proceeds and other aspects of the transaction.

Buyer Qualifications

You will want to ensure the Buyer is qualified and able to perform on the real estate offer they are making.  If they intend to pay cash for the purchase, "proof of funds" should be provided for an amount equal to the purchase price plus applicable closing costs.  If the Buyer will be financing the purchase a pre-approval letter from a reputable lender should be provided with the offer.  Your real estate agent should then contact the lender the Buyer is working with to ensure all is in good order and confirm the lender is familiar with and able to provide financing for the specific type of property the Buyer is purchasing.

Contract Timeframes

The timelines the Buyer is proposing for contract contingencies and the settlement date should be evaluated.  Most Ocean City real estate transactions move along on a thirty to forty-five day closing track.  This allows enough time to satisfy all of the contract contingencies, move items out of the property and file non-resident tax forms if applicable.  Be sure to get the home inspection and homeowners association review contingencies satisfied as soon as possible.  Extended settlement timeframes will result in additional carrying costs, which will ultimately reduce your net gain.    

Buyer's Market or Seller's Market

The current state of the Ocean City real estate market should be factored in as you analyze and negotiate offers on your property.  Seller's markets are characterized by low inventory and strong Buyer demand.  Seller's markets typically lead to higher offer prices and fewer contract contingencies.  Buyer's markets are characterized by higher inventory levels and lower Buyer demand.  Buyer's markets are less competitive than Seller's markets, which can lead to pricing leverage and an increase in contract contingencies.  In most instances, you will need to be more flexible with your negotiating strategies in Buyer's markets than you will need to be in Seller's markets.

Good-Faith Deposit

The amount of the Buyer's deposit can be a good indicator of their overall motivation and seriousness.  At a minimum the Buyer's deposit should be equal to one percent of the purchase price.  If the deposit is less than one percent the Buyers may have borderline qualifications or not be that serious of a purchaser, which could lead to complications with the sale down the road.  Buyer's that make deposits larger than one percent of the purchase price tend to be qualified and motivated.  Your real estate agent should advise you on what an appropriate deposit amount is relative to the purchase price and overall contract terms.

As you can see, there is a lot to consider and account for when evaluating real estate offers.  Once your Realtor receives an offer on your property they should provide you with a detailed breakdown that outlines the offer price, all associated costs, key contract terms and your estimated net proceeds from the sale.  They should then review the entire offer with you, explain its merits and drawbacks and advise you accordingly.  This overall process will put you in a position to make informed decisions and maximize your property's value and return.

If you have any other questions or would like to discuss selling your home or condo in greater detail, feel free to contact me directly anytime at 443-614-9179 or via email below.

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