Three Tricks Chicago Home Buyers Use (Sellers, Watch Out for #2!)

Everyone knows that selling a home involves the maneuvering of unexpected twists and turns. Be on the lookout for some of the tactics buyers use to convolute the process and respond accordingly. Below are some of the most common tricks that could result in lower profits on your end and how we handle these “Buyer Beware” scenarios.

#1 Long attorney reviews and inspection periods

When a property is actively on the market, time is on the seller’s side. However, once it is under contract, other prospective buyers typically lose interest and the buyer gains leverage. The longer the attorney review and inspection period goes on, the less power a seller retains in negotiations, and the greater the risk of getting roped into paying an unforeseen credit.

What you should do: Insist upon an attorney review period of five business days or less, schedule the inspection right away, and maintain consistent and transparent communication with other interested buyers in case things don’t work out with your current contract.

#2 High tax prorations and home warranties

As a seller, you must issue the buyer a credit for the property taxes they’ll have to pay the following year that covers the time you lived there. This is an equitable and standard part of the selling process. But the credit is based on a percentage of last year’s tax bill, and buyers can try to increase this percentage to get more money out of you. In fact, beyond angling for a lower purchase price, this is a common and often overlooked buyer strategy, so pay careful attention to tax prorations.

What you should do: Make sure the tax proration clause is set at a fair 105-110%.

#3 Unrealistic mortgage terms

Contracts include mortgage contingencies, meaning that buyers can back out and not risk their earnest money if they don’t get a mortgage under specific terms. Typically, the buyer has at least a month to get a mortgage, so if it falls through, you as the seller are in an unfortunate position on account of the time you’ve lost. Some buyer agents use the lowest possible interest rate quoted by a lender, which gives the buyer the ability to cancel the contract without penalty weeks later if rates increase. This is not necessarily common, but can be used as an excuse for backing out of a contract if the buyer gets cold feet.

What you should do: Make sure the interest rate listed on the contract is .25 to .5% higher than the rate on the buyer’s pre-approval.

So long as you’re aware of buyers’ common methods for saving themselves money and you respond accordingly, your selling process should be as transparent and as profitable as possible. Contact Center Coast Realty today and let us help you close a close a seamless and successful sale.

By | 2017-03-23T21:34:37+00:00 September 10th, 2016|

About the Author:

Mike McElroy is the Founder and Managing Broker of Center Coast. He and his team of agents run a real estate practice grounded in proven methodology and accelerated by ground-breaking technology and powerful relationships.