WHAT IS IN AN OFFER?
The purchase offer you receive, if accepted as it stands, will become a binding sales contract, so it’s important that it contains all the items necessary. The purchase offer includes items such as:
If the offer says “this offer is contingent upon (or subject to) a certain event,” the buyer is saying that they will only go through with the purchase if that event occurs. Here are two common contingencies contained in a purchase offer:
A good buyer
In most circumstances, the buyer will try and negotiate some discount from the listed price.
On the other hand, in a “hot” seller’s market, you may receive an offer at the list price (or more) or multiple offers, if more than one party is interested.
Keep the following considerations in mind:
This is a deposit that the buyers give when making an offer on a house. A seller should not take seriously, an offer that is not accompanied by a cash deposit to show “good faith.” A real estate agent or an attorney usually holds the deposit, the amount of which varies. This will become part of the buyer's down payment. There is an exception to this for those buyers obtaining 100% financing when closing costs are incorporated into the offer.
You will have a binding contract if, upon receiving the written offer, you sign an acceptance just as it stands, unconditionally. The offer becomes a firm contract as soon as the buyers are notified of acceptance. If you reject the offer you cannot later change your mind and hold the buyer to it.
If you like everything except the sale price, or the proposed closing date, or the basement pool table you won't leave with the property, you may respond with a counteroffer with the changes you prefer. The buyers are then free to accept it, reject it or even make their own counteroffer. For example, “We accept the counteroffer with the higher price, except that we still insist on having the pool table.”
Each time either party makes any change in the terms, the other side is free to accept, reject or counter again. The document becomes a binding contract only when one party finally signs an unconditional acceptance of the other side’s proposal.
Can the buyers take back an offer? The answer is yes, right up until the moment it is accepted, or even in some cases, if they haven’t yet been notified of acceptance. Even if the contract has been accepted and they have been notified, if they are in a due diligence period they can back out any time prior to the expiration of the due diligence period without loosing their earnest money deposit.
A period of time, commencing on the effective date of the contract, and ending at 5:00 pm on the date inserted in the contract. The process of a buyer investigating a property being purchased in a diligent manner, within a period of time specified in the purchase contract, to determine if the buyer is satisfied with the property and wished to proceed with the purchase. The due diligence period is also used to secure financing for the property. If a mortgage comittment has not been received prior to the end of the due diligence period, the buyer may ask for an extension.
When an offer comes in, you can accept it exactly as it stands, refuse it (seldom a useful response) or make a counteroffer 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 the same time, 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 the following costs:
Your present mortgage lender may have maintained an escrow account into which you deposited money to be used for property tax bills and homeowner’s insurance. In that case, remember that you will receive a refund of money left in that account, which will add to your proceeds.
When you receive a purchase offer from a would-be buyer, remember that unless you accept it exactly as it stands, unconditionally, the buyer is free to walk away. Any change you make in a counteroffer puts you at risk of losing that buyer.
Who pays for what items is often determined by local custom. You can, however, negotiate with the buyer any agreement you want about who pays for the following costs:
You may feel some of these costs are none of your business, but many buyers – particularly first-timer buyers – are short of cash. Helping them may be the best way to get your home sold.
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