You hired a Realtor® and put your house on the market at what you feel is fair market value. After several showings from various interested persons, and then perhaps after a second look, a buyer makes an offer.It may not be what you expected. Perhaps the offer includes contingencies, seller’s concessions and repairs up to 3% of the purchase price which gives rise for concern about ever reaching closing.
This is actually the beginning of a successful transaction. Negotiations and counter-offers are a normal part of the home-selling process. Here’s how you both get to the Closing table.
The buyer presents the offer on a residential purchase agreement – either the CRSP, the FR-BAR or the FR-BAR AS-IS. There are other contracts that could be used; however, these are the most commonly used by professionals in our industry today. This contract is a legally binding instrument only when all parties have agreed to all the terms and there now exists an effective date.
Using one of the documents listed above (with the appropriate associated addenda or riders), the buyer inserts all the terms they would like to include:
– The price
.- The down payment
– The Closing date
– Any contingencies, such as a financing contingency
– Or any other terms on the buyer’s wish list, including the personal property that may stay with the home (appliances, hot tubs, etc.)
If you, the Seller, like the offer, you can accept it by signing the contract. At this point, the offer turns into a binding purchase agreement. Neither you nor the Buyer can back out of the deal unless the contract allows you to do this, for example, if the buyer’s home inspection throws up material repairs that the buyer is not willing to take on or the Buyer gets denied a mortgage and has attached the appropriate addenda allowing him out of the deal with his deposit monies.
In most cases, the original offer from the buyer is not acceptable. You now have two choices:
- Reject the offer outright or
- Make adjustments to it (counter-offer).
Making a counteroffer
The Seller’s counter-offer is made right on the original offer and initialed by the Seller to be initialed by the Buyer — should the Buyer agree.
The Seller may:
– Raise the offer price
– Request a higher earnest-money deposit
– Delete some of the personal property the buyer is asking you to sell with the home
– Change (shorten) the inspection period
– Change the Closing Date.
The appropriate addenda must be attached and signed by the Buyer.
- The owner has filled out a four-page owners’ disclosure which must be reviewed and signed by all parties.
- If there is a COA or HOA, same must be disclosed.
- Any lead-based paint issues (if the home is built before 1978).
- Any mold or defective drywall – right to inspect on behalf of the Buyer.
- The right of the Buyer to cancel because of insurance premiums exceeding a certain percentage of the sales price.
- Appraisal contingencies, and so forth.
This article will be continued next month . . .