Money Management

If your house is on the market, you’re ready to receive offers from buyers. Read on to learn how the process works when you receive one. 

When you are selling your home, getting an offer is exciting. An offer means someone has expressed serious interest in buying your property.

But while you may be counting the days until you can get your check, pay off your mortgage, and move on to your next adventure, it’s important to know exactly what to expect in the aftermath of an offer coming in.

In most cases, once you’ve accepted an offer, you stand a good chance of actually moving forward with the home closing. In fact, older data shows that 96.1% of real estate contracts are successful, with those interested in buying a home actually ending up closing on it. But there’s no guarantee this will happen in every situation.

It’s helpful to understand the post-offer process so you’ll be able to anticipate potential pitfalls and do all you can to get your home to closing and walk away with plenty of money to deposit in your savings account or use for the down payment on your next home.

You’ll need to respond to the offer by the deadline

When potential home buyers submit an offer, they will usually include a deadline by which you have to respond. If you don’t sign by that time limit, technically the offer is null and void. This doesn’t necessarily mean the buyer wouldn’t be able to submit another one — but, unless there’s a good reason to delay (like waiting for other potential offers to come in), making the deadline is usually a smart move.

When you respond, you can accept the offer if you’re satisfied with it. You can reject it if it’s far less than you’re hoping for and don’t want to bother to negotiate. Or you can counteroffer. Your counteroffer could include details like a request for more money or a change to the closing date or some other terms you’d find more favorable.

If you send back a counteroffer, the potential buyers have the opportunity to accept or negotiate back with a proposal of their own. Hopefully, you will ultimately be able to find consensus and move forward with a signed offer. When you do, the status of your house will be changed to “Pending” in the multiple listing service (the widely used database of homes for sale).

The buyer will make a deposit

Once both you and the buyers have agreed on the contract terms and signed the buy/sell agreement, the buyer will usually have a set period of time to make an earnest money deposit. This essentially shows they are serious about moving forward.

The buyer could get this deposit back if they walk away for a valid reason as outlined by the contract. But if they don’t and just change their minds without justification, then the deposit would not be returned to them.

Typically, the title company, lawyer, or closing agent will be in charge of keeping this deposit in an escrow account.

The buyer will have a chance to do their due diligence

Most offers to buy property include clauses giving buyers a period of time to do their due diligence. This means they have time to do things like get an inspection, appraisal, and survey to make sure there are no unexpected issues that exist.

This process usually takes a few weeks, although it depends on the timeline specified in the offer agreement.

The buyer will ideally release any contingencies

Buyers also generally make the purchase of the home contingent upon — conditioned on — certain things happening. For example, if they are borrowing to buy, they may make the sale contingent on an appraisal showing it’s worth what they are paying for it and contingent on them securing financing.

Sometimes, buyers will include other contingencies in an offer. They might make buying your home contingent on the sale of their current house. The more contingencies there are, the more chances of the deal falling apart though, so be wary of accepting an offer with lots of pre-conditions.

If all goes well during the due diligence period, the buyer will release the contingencies and the sale will move forward.

Your closing will be scheduled and you’ll get your money

Finally, your closing will occur on the agreed-upon date. The buyers will produce the funds and you will get whatever’s left after paying off your mortgage loan and closing costs, including real estate commissions, taxes, and transfer fees.

This process can take weeks or even months, depending on the terms the buyer proposes for closing and whether they are securing financing. So be prepared to be patient. At the end, hopefully your sale will close and you’ll be able to move on to the next phase of life.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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It’s not easy to cope with losing your job. Learn what decisions you need to make to minimize the financial damage. 

Getting laid off can make you feel scared, disoriented, overwhelmed, and confused all at once. The floor feels like it’s swaying under your feet, and the staggering effect can make it hard to figure out your next step. Everyone is telling you to take a deep breath and relax, but how can you stay calm when you don’t know how you’ll pay the bills?

Instincts might be kicking in, telling you to start job hunting immediately. But before you take that important step, the following three are crucial to keep your personal finances afloat.

Apply for unemployment

Unemployment insurance can replace all or a portion of your regular pay on a weekly basis. Each state has its own minimum and maximum benefit coverage, will pay out for a limited period, and will require various tasks for your benefits to stay active. For example, in my current state, Oregon, you can receive a weekly benefit of 1.25% of your former annual gross earnings (up to $783 per week) for 26 weeks, so long as you’re available to work and actively seeking employment.

If you can, apply for unemployment immediately after getting laid off. Agencies can take a few weeks to process claims, so it’s best to get started as soon as you can. To apply online, here are a few things you’ll need:

Your previous employer’s contact informationA recent pay stubAny tax documents from the most recent tax season.

Keep in mind that if you have moved states in the last year, you may need to file with the state you previously worked in.

Secure short-term financing

Your weekly benefits may not be enough to cover your budgeted expenses. If that’s the case, you might need to get low-interest financing, which can help you pay bills without sinking you in too deep. It’s important to stay away from predatory loans. Here are a few financing options you might want to consider:

0% APR credit cards: These credit cards come with an introductory period of 0% APR, so you won’t pay interest during that period. This is a good option if you’re confident you can find work before the intro APR period ends. Once it does, your card will revert to a higher APR and you’ll have to pay interest on money you borrowed.Home equity loan: If you own your home and have equity in it, you could borrow against it with a home equity loan. These loans typically have lower interest rates than credit cards and give you a longer payback period. The drawback is that you’re putting your home up as collateral, meaning if you don’t pay off the loan, your lender could repossess your home and sell it to recoup the loss.

Ask for relief

Finally, don’t hesitate to contact your bank, credit card issuers, utility providers, landlord, or other lenders to explain your situation. Many are likely willing to work with you on payment defaults or fee waivers, or offer some other kind of financial assistance. Credit card companies, for instance, offer hardship programs, while mortgage lenders may let you temporarily pause loan payments without defaulting on your home (also known as mortgage forbearance).

It’s not easy getting laid off. You might have to incur some debts, or sell things to cover your budget. But you can minimize the financial damage — and keep a clear head — by applying for unemployment, asking your lenders for relief, and borrowing money on low-interest loans and credit cards.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Your credit score is impacted by your credit limit. Learn the pros and cons of a credit limit increase and how to get one. 

When you’re managing a credit card, it’s important to track your credit limit and keep a low credit utilization ratio. One way to improve your score and reduce your ratio is to ask for a credit limit increase. But what happens when you ask for one? Here are the steps of asking for an increase, what happens during the process, and the benefits and drawbacks of getting one.

How your credit limit affects your credit score

Your credit limit is based on your credit score, your income, expenses, and other factors. The credit card company sets it when you first apply for your card.

Your credit score is a reflection of your credit utilization ratio, which is the amount of credit you have available versus how much you’re using. It makes up 30% of your credit score.

By asking for a credit limit increase, you’ll have more credit available. As long as you don’t increase your credit card debt, this can reduce your credit utilization ratio and improve your credit score.

The process of asking for a credit limit increase

To ask for a credit limit increase, you’ll need to contact your credit card company directly. You can either call the customer service number on the back of your card or send a message through your online account.

Some companies may allow you to request a credit limit increase through a mobile app. When you ask for a credit limit increase, you’ll need to provide some information about your current income and expenses to help the issuer determine whether you are eligible for a credit limit increase.

Your card company may periodically increase your limit if you consistently spend responsibly and pay your bills on time. It’s important to note that major card issuers typically wait at least six to 12 months before automatically raising your credit limit.

The benefits and drawbacks of getting a credit limit increase

In addition to improving your credit utilization ratio, a higher credit limit can give you increased purchasing power and flexibility in case of an emergency.

However, there are also drawbacks to getting a credit limit increase. You may be tempted to use more credit, which could increase your debt and interest payments. Additionally, a credit limit increase can temporarily decrease your credit score if the bank requests a hard inquiry on your credit report.

What to do after you get a credit limit increase

If you’re approved for a credit limit increase, it’s important to keep track of your credit utilization ratio and spending habits. Even though you have more credit available, it’s still important to keep your spending in check to avoid unnecessary debt.

You may also want to set a goal to pay off your credit card balance each month to avoid interest payments.

What if you’re denied a credit limit increase?

If you’re denied a credit limit increase, don’t panic. You can ask the bank for a reason why your request was denied. Common reasons for denial may include a low credit score, a high debt-to-income ratio, or recent late payments.

If you’re denied, focus on increasing your income, paying off your current debt, and improving your credit score before asking again. Credit card companies have different requirements, so you can also choose to open up another credit card if you need more flexibility and want to increase your credit utilization ratio.

Getting a credit limit increase can be a useful tool for managing your finances and improving your credit score. However, it’s important to understand the process and potential drawbacks before requesting an increase. By keeping track of your spending, paying off your balance, and understanding your credit score, you can make informed decisions about when and how to ask for a credit limit increase.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More