A home purchase offer is a legal document presented by an interested buyer to a homeseller. This is no simple document because it actually includes all the terms and conditions of the sale which are mostly negotiable. It is just right then that homesellers focus on, not only a few, but all the terms of the sale.
The terms of a homesale cover the closing date, the specifics of how the purchase will be financed by the buyer, the closing costs and how they will be shared and paid, the items included in the sale and those that are not as well as the various contingencies of the buyer. Some of the common contingencies are for property inspection, appraisal, financing and review of the property title record. For homeowners selling their residential property on their own, real estate experts advise that they thoroughly review the purchase offer after receiving the document.
Evaluating terms
Be sure to evaluate all the terms and conditions before making a decision. Remember that every term can be negotiated so consider your options. If you are amenable to some of the terms, go ahead and accept them but you can also counter the other terms to adjust them according to your needs. It will be helpful if you list the terms and conditions on a separate sheet and make a note beside each of the term to determine if they are acceptable to you or not.
If, for instance, you don’t agree with some terms such as a low price, too long closing date and limited time to move out after closing, you can counter them with a higher price, shorter closing and more time to vacate your home. It’s just a matter of negotiating well and communicating your needs and concerns clearly to the buyer.
Here’s a tip. Read and examine a blank real estate contract to familiarize yourself to the standard and non-standard terms. Understand the special clauses normally written above the signature block as these are used by the buyer to make non-standard demands, to ask the seller to pay certain portions of his costs and to demand a specific date for the homeowner to move.
Important considerations
Before accepting the purchase offer, it’s advisable that you make sure your buyer has been pre-approved or at the least, pre-qualified for a real estate mortgage enough to buy your home. Avoid signing an offer until the buyer has been pre-qualified.
Other things to watch out for include longer time for buyer to get financing, low earnest money deposit, penalty if the seller fails to move out of the home during the specified date and requirement for the seller to pay the mortgage costs of the buyer.
After reviewing the offer, you have several choices. First, you can accept the offer as it is and sign it to become a legal sales contract or agreement. Second, you can make a counter-offer by eliminating the unacceptable terms and providing your own contract with your specific terms. Third, you can reject the offer if you are not amenable to all of the terms and conditions.
When considering the purchase price offered by the buyer, look at it as a whole. Sure the buyer may have offered a price lower than what you wanted but there may be some terms that counterbalance the low purchase price such as the buyer paying for the closing costs or a fast closing.
As for the earnest money, the minimum requirement should be at least $500. There are some homesellers who require buyers to issue an earnest money check before signing the offer. The earnest money is held by a third party such as your real estate lawyer, the buyer’s agent or whoever the two parties specify in an escrow agreement. However, if you know your buyer and trust him, an earnest money may not be needed.
You also have the freedom to accept a second or backup offer if you wish. Just make sure that your second buyer knows and understands that your house is already under contract and that he or she is only next in line.
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