When a buyer proposes an offer, you can accept or deny it or make a counteroffer stating what can change for it to be acceptable. It’s then up to the buyer to accept or refuse your counteroffer or make another counteroffer to the new terms. Some essential tips to keep in mind:
Some states require sellers to disclose certain information about the property, called a “seller disclosure”. The requirements vary based on state and local laws. Disclosures provide details about a property’s condition that might negatively affect its value and that may not be obvious to the buyer, such as plumbing issues, hidden defects, termites, etc. Sellers who willfully conceal information can be sued and potentially convicted of a crime. So, the rule is always disclose, disclose, disclose.
A buyer’s offer can be “As-Is” or based on a repair limit. The ” As-Is” offer means the buyer will purchase the house without requiring you to make repairs if it passes the buyer’s inspection. The repair limit offer requires the seller to make repairs after inspection or provide the buyer with a credit for the repairs. Knowing which contract you have let’s you calculate what you can expect at closing.
Contracts contain many terms, some of which are important to know up front.
An inspection period is the period of time that the buyer may inspect the home. During this time, a professional home inspector will come to your house and inspect the entire property including the attic, basement, plumbing and electrical systems. After the inspection is completed the inspector will provide the buyer with a report. Based on that inspection report, the buyer can move forward with the contract, cancel (in an “As-Is” contract) or ask for repairs (in a repair limit contract).
It’s important to recognize the type of financing that the buyer is attempting to obtain to purchase your house. A qualified buyer will have a pre-qualification letter from a reputable lender for the amount of the purchase price or more. Certain financing types, like FHA or VA loans have additional requirements that you should familiarize yourself with before agreeing to.
Depending on your county and state, closing costs are paid by the buyer and the seller in different ways. Typically however, the biggest items on the closing statement are transfer taxes, title insurance premiums, and title search fees.
Check to make sure the closing date on the contract is realistic. Typically a buyer using financing will need 45 days to close. Any sooner and you will need to negotiate extensions later or change your moving plans.
Does the contract provide for an appraisal contingency? If so, your contract can be cancelled until an appraisal is conducted, which usually takes place a few weeks into the process. The more contingencies that your contract has, the less confident you can be in closing on time.
The rubber meets the road when it comes to contracts and offers. The details matter because one check box can swing thousands of dollars toward or asway from you. So, it’s important to know what you are signing before you sign a contract.