Title


Take me back to the first pageGeneral Real Estate InformationInformation for BuyersInformation for SellersNot just a House , but a HomeClick to see current issue
Information on Real Estate FinancingUseful links about the communityInformation on schools in the areaClick to go to my site mapSend  Beth an email


Receiving Offers
What the Offer Contains
Contingencies

Calculating Net Proceeds

Counteroffers

 

Receiving Offers

Oral promises are not legally enforceable when it comes to the sale of real estate. Therefore, you need to enter into a written contract, which starts with your written proposal. This proposal not only specifies price, but all the terms and conditions of the purchase.

REALTORSâ usually have a variety of standard forms (including Residential Purchase Agreements) that have been utilized thousands of times and are kept up to date with the changing laws. When you use a REALTORâ these forms will be available to you. In addition, REALTORS® offer protection for all parties and cover the questions that need to be answered during the process. In many states certain disclosure laws must be complied with by the seller, and the REALTORâ will ensure that this takes place.

After the offer is drawn up and signed, it will usually be presented to the seller by your REALTORÔ, by the sellers' REALTORÔ if that's a different agent, or often by the two together.

Back to top

What the Offer Contains

The purchase offer you receive, if accepted as it stands, will become a binding sales contract (known in some areas as a purchase agreement, earnest money agreement, or deposit receipt). It's important, therefore, that it contains all the items that will serve as a "blueprint for the final sale." These purchase offer items include such things as:

  • Address (sometimes legal description) of the property;
  • Sale price;
  • Terms (all cash or subject to your obtaining a mortgage for a given amount);
  • Seller's promise to provide clear title (ownership);
  • Target date for closing (the actual sale);
  • Amount of earnest money deposit accompanying the offer, and whether it's a check, cash or promissory note (and how it's to be returned to you if the offer is rejected, or kept as damages if you later back out for no good reason);
  • Method by which real estate taxes, rents, fuel, water bills, and utilities are to be adjusted (prorated) between buyer and seller;
  • Provisions about who will pay for title insurance, survey, termite inspections and the like;
  • Type of deed to be given;
  • A provision that the buyer may make a last-minute walk-through inspection of the property just before the closing;
  • A time limit (preferably short) after which the offer will expire; and Contingencies, which are an extremely important matter (and discussed in detail below).

Back to top

Contingencies

If your offer says "this offer is contingent upon (or subject to) a certain event," you're saying that you will only go through with the purchase if that event occurs.

The following are some common contingencies contained in a purchase order:

  • The buyer obtaining specific financing from a lending institution. If the loan can't be found, the buyer won't be bound by the contract.
  • A satisfactory report by a home inspector "within 10 days (for example) after acceptance of the offer." The seller must wait 10 days to see if the inspector submits a report that satisfies you. If not, the contract would become void.
  • Getting the job you just interviewed for.

Again, make sure that all the details are nailed down in the written contract.

Back toTop

Calculating Your Net Proceeds

When an offer comes in, you can accept it exactly as it stands, refuse it (seldom a useful response), or make a counter-offer to the buyers, with the changes you want. In evaluating a purchase offer, you should estimate the amount of cash you'll walk away with when the transaction is complete.

For example, when you're presented with two offers at once, you may discover you're better off accepting the one with the lower sale price, if the other asks you to pay points to the buyer's lending institution.

Once you have a specific proposal before you, calculating net proceeds becomes simple. From the proposed purchase price you can subtract:

  • Payoff amount on present mortgage;
  • Any other liens (equity loan, judgments);
  • Broker's commission;
  • Legal costs of selling (attorney, escrow agent);
  • Transfer taxes;
  • Unpaid property taxes and water bills;
  • If required by the contract: cost of survey, termite inspection, buyer's closing costs, repairs, etc.

Your present mortgage lender may maintain an escrow account into which you deposit money to be used for property tax bills and homeowners insurance premiums. In that case, remember that you will receive a refund of money left in that account, which will add to your proceeds.

Back to top

Counteroffers

When you receive a purchase offer from a would-be buyer, remember that unless you accept it exactly as it stands, unconditionally, the buyer will be free to walk away. Any change you make in a counter-offer puts you at risk of losing that chance to sell.

Who pays for what items is often determined by local custom. You can, however, arrive at any agreement you and the buyers want about who pays for:

  • Termite inspection;
  • Survey;
  • Buyer's closing costs;
  • Points to the buyer's lender;
  • Buyer's broker;
  • Repairs required by the lender; and
  • Home Protection Policy.

TIP: You may feel some of these costs are none of your business, but many buyers, particularly first-timers, are short of cash. Helping them may be the best way to get your home sold.

Back to Selling