Home Sellers - Things to Look out for When You Receive an Offer
on Your Home
You are selling your home and just received an offer from a
prospective buyer. It is time to read over the purchase
agreement presented to you. The agreement is a very important
document because it is a legally binding contract between you,
the home seller, and the home buyer. It spells out all of the
details of the sale of your property. It is best to get a real
estate attorney or Realtor to help you with this.
Besides the obvious price, financing terms and closing date here
are a few things to look out for:
Financing Contingency
How long does your buyer have to get financing? This is very
important to know because you don't want to take your property
off the market for a long period of time only to find out later
that the buyer could not get a mortgage. Typically, 30 days is
plenty of time in a normal residential real estate transaction.
Time Periods
Real estate contracts contain alot of calculations in days - 30
days for financing, 10 days for an inspection, etc. How are the
time periods computed? Some contract state that days are
business days only, some contracts state that time is calculated
by calendar days. This can make a big difference. Make sure you
know how time is calculated in your contract.
Repairs
Who is going to pay for repairs? Are you, the seller, obligating
yourself to make repairs? Some contracts require the seller to
repair items up to a certain dollar amount. Tthis amount is
typically quoted in terms of percentages of the purchase price.
If you are obligating yourself to a 1.5% repair limit on a
$1,000,000 home that can be alot of money. Make sure you know
what that figure is.
Be aware of how the buyer can cancel the contract if the repairs
are too much. If the contract states that the buyer can cancel
the agreement if repairs exceed $100 then this allows the buyer
to pretty much cancel for any reason. Just about any house can
have repairs of more than $100.
In a nutshell, make sure the repair limit is high enough to
prevent a buyer from canceling the agreement on tiny repair
items and low enough so that you are not obligating yourself to
too much money.
Inspectors
Make sure the contract spells out who can do the home
inspection. Do you really want the buyers brother in law doing
the home inspection? Most contracts state that the inspector has
to have some sort of occupational license.
Title/Attorney Fees
Who is going to pay for title or attorney fees to close the
transaction. Here in Sarasota county (Florida) the buyer
customarily pays for title insurance. Know the customs in your
area. These fees can add up.
Escrow Money
How much money should the buyer put in escrow? This amount
depends alot on how far off the closing date is. You would
obviously want more money for a buyer who plans to close in 90
days than one that wants to close in 2 weeks. Try to make it a
painful enough amount of money for the buyer to lose in the
event he does not show up at closing.
Can you imagine packing all of your belongings, getting a moving
truck, cleaning your property and then find out at the last
second the buyer is not going to buy your home? What a pain in
the neck. Try to get as much money in escrow as possible.
There is much more to a typical real estate contract than this
but these are a few items to definitely look out for.