A C C E P T I N G A N O F F E R
You've received an offer, but make sure you know exactly what is involved -- It's More Than Just The Sale Price! It's a legally binding contract.
NOT ALL OFFERS ARE EQUAL. This document becomes a legally binding document and sets the Terms & Conditions for the sale. Is this a Cash Offer or are they buyers asking you to wait until they sell their house before they buy yours (Contingency Sale)? Are the buyers pre-qualified with financing in place? Are the buyers asking you to "carry the contract" or "provide additional incentives"? Are they asking you cover some or all of their closing costs? Your REALTOR® can help you understand the Pros & Cons of any offer.
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 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:
- 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 and other utility 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 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.
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 is free to walk away. Any change you make in a counteroffer puts you at risk of losing that chance to sell. 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:
- Termite inspection
- Buyer's closing costs
- Points paid to the buyer's lender
- Buyer's broker fees
- Repairs required by the lender
- Home protection policy
THE PRICE IS NOT ALWAYS RIGHT. “The higher the price, the better the offer.” Do not let yourself be fooled by this popular misconception. Price is not always the determining factor when accepting an offer for several important reasons: the initial offer is usually not final, and there are a number of terms and conditions that may influence the final outcome of a price. You can trust our professionals to help you thoroughly evaluate every proposal without compromising your marketing position.
NEGOTIATING THE RIGHT WAY. We take the ethical responsibility of fairly negotiating contractual terms very seriously. I t is our job to find a win-win agreement that is beneficial to all parties involved. You may even have to deal with multiple offers before ratifying the one you judge to be the most suitable for you – and as your agents, we will guarantee a thorough and objective assessment of each offer to help you make the right choice.
THE INITIAL AGREEMENT AND DEPOSIT (EARNEST MONEY). An effective agreement is a legal arrangement between a potential purchaser and the property’s seller. Laws vary from state to state, but in order to be a legally, binding agreement, the agreement may require consideration. This consideration (initial and additional deposit) is to be held in the closing agent’s escrow account pending the fulfillment of conditions or contingencies in the effective agreement. Some important tips to keep in mind to streamline the process even further:
- KEEP WRITTEN RECORDS OF EVERYTHING. For the sake of clarity, it will be extremely useful to transcribe all verbal agreements including counter-offers and addendums, and convert them to written agreements to be signed by both parties. We will assist you in drafting all the paperwork for your sale and make sure that you have copies of everything.
- STICK TO THE SCHEDULE. Now that you have chosen your offer, you and the buyer will be given a timeline to mark every stage in the process of closing the real estate contract. Meeting the requirements on time ensures a smoother flow of negotiations and also ensures that each party involved is not in breach of their agreements. During the process we will keep you constantly updated so you will always be prepared for the next step.