When selling your home, it's likely that your primary focus is receiving the highest price possible for your property. While this is certainly an important factor, there are other details that must be considered when you receive an official offer on your home in the form of a Real Estate Purchase Contract.
Negotiating this wordy and legally binding document can seem daunting, but understanding the information contained in the REPC will save you time, money and heartache during the process of selling your home.
Checking for Contingencies: After considering the price offered by the buyer, savvy sellers will then determine if the Purchase Offer contains any contingencies. One common possibility is that the offer to purchase your property is contingent on the sale of the buyer's home. If the buyers' property sells, the sale goes through. But, if it does not, the sale is off and the buyers' deposit is usually returned.
Structuring a Contingent Sale Offer: There are ways to structure a contingent sale offer to make it less risky for sellers. One way is to include a release clause in the contract, which allows sellers to continue marketing their home in the hopes of finding a better offer. If such an offer comes along, the sellers notify the buyers that they must remove the contingency by a certain date and show that they are able to close. Otherwise, they must withdraw from the contract. The sellers are then free to proceed with the other offer.
Financing Red Flags: Another red flag to watch for is a request by the buyer for excessive time to secure financing. This is a reality for many first-time home buyers or even veteran buyers whose credit is spread thin. If you're not comfortable with the extended time frame, you can request that the buyer provide you a preapproval ( not prequalification) letter by a certain date. This is in addition to the committment letter provided by the moratge institution when the loan is approved. A well-priced offer can also seem less appealing if the buyer offers a low earnest money deposit or asks you to pay the closing costs. Feel free to counter any elements of the offer that don't sit well with you, but be realistic at the same time. You do want to sell your home.
Checking What's Required of You: Don't forget to take note of your requirements in the offer. Be confident that you can vacate your home by the closing date requested before accepting the offer. On the other hand, you may want the closing process to move swiftly. Even if the offered price is less than you wanted, a buyer who can close and take possession quickly can counterbalance the lower price.
The bottom line? It pays to spend 20 minutes reviewing a blank real estate purchase contract as soon as you put your house on the market. Ask your listing agent to provide you with one and even go over it beforehand with you. That way, when you receive an offer, you'll be ready to break it down into its specifics, and respond confidently.