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The 4 Components of a Sale: Terms

Posted by Mitch Ribak on Saturday, September 19th, 2015 at 8:20am.

The 4 Components of a Sale: Terms

Real estate sales are composed of four basic components. Homes are sold every day based on their locations, conditions, terms and prices. Some sales are made quickly with large profit margins, while other properties sit on the market much longer and sell for far less. Understanding each component of a real estate sale helps sellers make informed decisions on how to best position their listings in the current marketplace to attain favorable results.

The third component of a real estate sale is terms.

Negotiable terms help properties become more marketable overall. Sometimes buyers will ask for small items to be added to a closing contract, such as a washer and dryer. These are called buyer requests and can range from leaving a set of drapes behind to building a fence around the property’s perimeter.

In other situations, buyers may be looking for flexibility with possession dates or closing costs. Sellers may be able to negotiate more favorable asking prices if they are willing to adjust possession dates to meet buyer needs.

Oftentimes, adjusting closing costs to offset other expenses, such as repairs, leads to a sale. For instance, if a home is due for a roof replacement, sellers can offset that by absorbing more of the closing costs. This is a favorable option for sellers because it can lead to a higher sales price with no work up front.

Buyers using FHA or VA financing must adhere to strict property conditions and may find homes more desirable if sellers agree to make repairs. This term involves sellers making repairs prior to the sale on behalf of the buyer and often is the cinch pin that closes deals. Repairs can range from minute actions like replacing a leaky faucet to large projects like roof replacement.

Seller financing is another term that can have great impact on a home’s marketability if it is offered in the listing. There are other viable alternatives if seller financing financing isn't an option. This Investopedia article lists a few of the financial terms available to sellers.

Being flexible with terms can increase a home’s sales potential, but that doesn’t mean that sellers should forsake their personal wishes to cater to the current real estate market. To be sure that their best interests are being attended to, sellers should develop their terms with an open mind. A consultation with a real estate expert before setting terms can lead to heightened results once the property is listed.

Even after the property is listed, terms can be reconfigured. Sellers can reexamine their terms to see if slight adjustments will increase sales potential while still meeting their needs. When doing this, sellers will sometimes offer to do things that buyers are likely to request, such as erecting a fence or including new appliances at the current purchase price. Such incentives can set a listing apart from others in the marketplace.

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