Orlando Real Estate » Home Selling » Real Estate Offer and Contingencies-part2
Real Estate Offer and Contingencies
Major contingencies covered in a sales contract
Money
Unless the buyer is paying in cash, the buyer will need a mortgage loan and the buyer will be released from the contract if unable to get a big enough loan. Most contracts will require the buyer to describe their loan application in more detail than the seller cares to know. Why? So the buyer can't get out of the contract by falsely claiming an inability to get a loan.
Inspections and repairs
Be prepared for brain numbing lists such as: "inspections may include appliances, heat and air conditioning systems, electrical systems, plumbing, machinery." The point is the buyer has the right to inspect the property. If problems are found, the seller can either make repairs or release the buyer from the contract.
Clear title
Does the seller really own the property and does he have the right to sell it? Most contracts handle this by requiring the seller to turn over a "marketable" title which has been researched and insured by a title company.
General information that needs to be in the sales agreement:
The legal names and addresses of the Sellers and Buyers.
The date when the purchaser should have their approval and when the settlement will take place.
Where, and in what form, the deposit will be handled.
The terms of the purchase – Cash, FHA, VA, Owner Financing, etc.
Time limits on inspections and financing.
Approval of disclosures provided by the Seller.
Structural, electrical, plumbing, termite, etc. inspections – who pays, and when.
Buyer and seller signatures and the date.
This is not a complete list because it changes with every transaction.
After reviewing the offer, you have several options:
Accept the offer as is.
In most cases, you simply sign the offer.
Make a counter-offer. Cross out unacceptable terms on the offer, or fill out your own contract, and specify the terms you want.
Reject the offer.
If the offered price is less than what you wanted, look at the offer as a whole. There maybe terms that counterbalance the lower price (i.e.: fast closing, buyer paying their own closing costs, etc.). Be prepared to split the difference if you and the buyer come within $1000 of each other.
As stated before, the buyer should provide at least $1,000 or up to1% of purchase price in earnest money. Some people won't sign an offer until an earnest money check has been made out to them. The earnest money check is made out to you and held by a third party (your attorney, the buyer's real estate agent, or whomever you stipulate in an escrow agreement such as a title company). Under many conditions, this check is yours to keep if the buyer defaults on the contract. Once you have signed an offer, you may still accept a backup offer, as long as you make sure the backup buyer understands the house is under contract, and his contract is second in line.
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