If you are one of the fortunate homeowners that have a pending sales contact on your home, then you need to know how to review an offer on your home. In today’s depressed home market, many homeowners are turning to “For Sale by Owner” rather than paying a realtor commission. However, without experience in real estate, the homeowner may accept an offer for their home without understanding the fine print. Once the contract of sale is signed, the homeowner is bound to the terms contained in the contract unless the purchaser agrees to amend or rescind the offer.
Five tips for reviewing an offer on your home are:
1. Purchase Price – This is the number one item to review. Purchasers may make an initial offer lower than they are willing to pay. If you counteroffer, they may agree to pay more for the home but beware, if you are greedy you will lose the sale.
2. Closing Date – The anticipated closing date is very important because it will determine when you are to vacate the home. If you are purchasing another home, make sure you have sufficient time to close on the new home and schedule your move before the closing date of your current home.
3. Closing Costs – In a typical real estate closing, there are closing costs that are the responsibility of the buyer (i.e. costs of a mortgage) and expenses that are the responsibility of the seller (i.e. deed stamps). To entice purchasers, some sellers offer to pay part or all of a buyer’s closing costs. Review the closing costs section carefully to determine if you are paying any of the buyer’s closings costs as this decreases your profit.
4. Home Inspection and Repairs – As a purchaser, it is always smart to require a home inspection and include a clause that any repairs up to a certain dollar amount will be done prior to closing. For sellers, this could become a headache and cost them money if the home inspection reveals repairs. Furthermore, either the seller or the purchaser can pay for this inspection so make sure you review the offer to see who pays for the inspection.
5. Conditions – When reviewing a home offer, be sure to read all of the conditions. This section is where purchasers will place such things as “contingent upon purchaser closing on their current home.” If you agree to this condition, your closing will not happen if the buyer cannot sell their current home. Other conditions may include repairs to be made prior to closing; contingencies for a home inspection; the offer is to include certain appliances, home furnishings or decorations (curtains and blinds) or even such conditions as the sellers will vacate the home by a certain time of day. Conditions can be a dangerous part of a home offer and need to be reviewed cautiously.