When reviewing offers for your property in Detroit, it’s important that you know how to correctly run the numbers. Just because an offer looks good on paper, doesn’t mean it is the best choice for you. Learn more about how to crunch the numbers in our latest post! While the highest offer might appear to be the best, this isn’t always the case. There are many numbers you will need to factor in when reviewing offers for your house in Detroit. Below, we discuss some of the costs you may face when selling.
With a traditional sale to a private buyer, a seller can expect to pay about 2-5% of the final sale price in closing costs. While this varies by the transaction, you’ll want to budget at least 5% to closing costs to ensure you are covered. You don’t want to be surprised at the closing table, owing more than you had planned for.
While reviewing offers for your house in Detroit, you’ll want to consider all of the costs you encountered making repairs and fixing it up. Repairs aren’t always cheap and you will likely have to face them before putting your property on the MLS. In addition, your potential buyer will likely attempt to negotiate even more repairs once the inspection has been completed. Spending money on a house you ultimately want to sell can be extremely frustrating, with a direct sale, you’ll be able to keep that cash in your pocket.
There are all kinds of contingencies a buyer might put in their contract. Having a contingency protects the buyer should something go wrong. If there is a problem with the property, they will be able to back out of the sale without any penalty. Some common contingencies include things like not being able to sell their current house in time. If their lender backs out of the deal. And if the inspection comes back with a significant number of repairs that need to be made.
How fast will your buyer be able to close? As any property investor will tell you, the longer you hold on to a property, the more it will end up costing you. Holding costs can add up quickly, eating into your profits. While the property in on the market, you’ll have to continue paying for things such as homeowners insurance, property taxes, utility bills, possibly a mortgage and routine maintenance on the property. You are responsible for these items up until the day of closing. If your house sits on the market for a while or if your sale falls through, you could find yourself stuck paying these costs for the next several months.
When reviewing offers you’ll want to calculate the risk involved in the sale. If your buyer is using financing, you’ll want to be prepared just in case things fall through. Oftentimes, a lender will back out of the deal if a property appraises too low. Sales fall through every day, and you’ll want to be prepared if yours does too. If you’re working with a buyer who is using financing, make sure they are pre-approved, not just pre-qualified.
If you choose to sell to a cash homebuyer, your risk of things falling through drops significantly. Cash buyers will have the money ready to go before making an offer for your property. This will save you days or even weeks as opposed to dealing with lender requirements. When you sell directly, you won’t have to deal with appraisals, inspections, repairs or any red-tape from a lender.
If you choose to work with a real estate agent, you’ll have to commit to a listing agreement. Once you have entered into this agreement, your agent will be entitled to their commission, or at least a part of it, no matter how the house sells. However, if you are able to find a reputable buyer such as Detroit Fair Offer before hiring a real estate agent, you’ll be able to instantly save on commission costs. This can be upwards of 6% of the final sale price that you’ll be able to keep in your pocket. This could amount to thousands of dollars you will be able to use for your next property should you so desire.
Appliances and Fixtures
Sometimes when selling a house, the furniture, fixtures and appliances will all come into play. Does your potential buyer want to keep any of these items or will you be taking everything with you? If you are leaving any items with the new buyers, you’ll want to factor in how much it will cost you to replace these items. Having to replace appliances, fixtures and other items in your new home can cost a fortune. Make sure you are prepared for these replacement costs before accepting an offer for your property in Detroit.