|
 Offers
and Contracts
Everything
related to the purchase of real estate must be in writing. Verbal
contracts to purchase real estate cannot be enforced.
When someone decides to buy your home, the buyer and his agent will
prepare a purchase agreement that will be presented to you through
your agent. The offer
will be written on a standard, pre-printed
Buy and Sell contract form provided by the Greater Lansing
Association of Realtors.
A contract is created when the Buyer and
Seller agree to price and terms and have signed all parts of the
contract. The contract clearly outlines the terms of the sale and
establishes the rights and obligations of the Buyer and Seller. It
specifies how the property will be paid for and sets a time frame
for the completion of inspections and transfer of the property.
What will
be included in the written offer:
Purchase price
Of
primary importance to you is the amount of money being offered for
the property. Offers made during a seller’s market, or a
balanced market, will be very close to the asking price. During a
buyer’s market you should not be surprised to see offers that are
lower than your expectations.
|
IMPORTANT: Try to be
open minded about all offers, including the seemingly rude “lowball”
offers. People negotiate in various ways. Some will simply pay what
you’re asking, while other will start at very low price just
to see how you will respond. |
Financing
Buyers rarely pay cash. A buyer who is financing the purchase will
need to provide a letter from his lender stating that he has been
pre-approved for a loan. Such a letter is provides assurance
that the buyer will be able to complete the transaction. A buyer
with questionable financing is not a good risk.
Reserved items and personal
property
Just
about anything attached to or on the property is negotiable.
The
buyer may request that certain reserved items, furnishings, or
perhaps garden equipment be included in the purchase of the home.
You are not required
to give up personal property and can simply say no to specific
items.
Closing and
occupancy
The
offer will specify the approximate closing date and when the Buyer
would like to take possession of the
property.
The Buyer
will expect the home to be available
for occupancy immediately after
closing unless you
have
negotiated for additional time for moving.
 Be prepared to write a check for rent if you plan to remain in the
home after closing.
This compensation is referred to as “rent
back” and is based on the daily amount
the buyer is paying for principal and interest on his loan, taxes,
and insurance.
|
NOTE: The Buyer begins paying
his mortgage on the day of closing. He should not
be stuck paying
for the Seller's living expenses while waiting for him to move out. |
Earnest
money deposit
The buyer is required to include “earnest money” along with his
offer. This money is deposited in a trust account with either a Real
Estate Broker or a Title company. The amount of the deposit is
important. Low amounts may indicate that a buyer lacks funds or is
not very serious. Larger deposits indicate a more serious buyer with
substantial financial support.
Contingencies in the offer
The
contract provides for special conditions or contingencies that will
become a part of the contract.
These are the most common:
Financing Contingency
This contingency is built in to all Real Estate contracts and is not
negotiable. Even though an accepted contract is in place, a buyer
can not be forced to purchase a home if they are denied a loan. Even after a buyer has
been approved for a mortgage, circumstance can arise which make it
impractical
for the lender to finance the loan.
Inspection Contingency
The buyer will
ask for a limited time period during which to examine your
property to determine the condition of the structure, plumbing,
electrical system, heating and cooling, well and septic. Should the
home inspection
reveal problems that were not noticed when the buyer made his offer;
he can withdraw the offer and walk away from the contract. A
buyer is not required to do an inspection and may wave this
contingency.
Sale of
Current Home
Some buyers must make an offer that is contingent upon the sell of
their current home. Such an offer is not
very attractive, but might be appealing. Varying market conditions
may affect your willingness to accept such
an offer. If it’s necessary for the buyer to sell his current home
before closing on your home, he must make this clear in the offer.
Your
response to the offer:
You may respond to an offer in one of these ways:
-
Accepted as it
is written
This means that you are satisfied with all aspects of the offer
and are willing to accept it without any additional provisions.
-
Rejected
This usually occurs when the offer is completely unacceptable.
Many sellers will reject an offer with a very low price or
one that contains conditions that too difficult to work with.
-
Amended by the
seller
You may amend the terms if much of the offer is attractive and
you would like to continue negotiation.
An amended response is considered to be a counter offer. The
buyer can accept your proposed terms, reject them, or write a
new offer.
|
NOTE: There is no law that requires a
Seller to respond to an offer. Low ball offers with
outlandish terms can
be ignored. |
Negotiation
The
Seller should never receive calls from
a potential Buyer or his agent.
All
discussions and exchanges of paperwork will be handled through the
agents representing each party.
This is the most practical way of conducting Real Estate business.
Emotions tend to run high during the sale of a home and personality
clashes could sour what would otherwise be a very manageable
transaction.
A binding contract is created when both the buyer and seller have
agreed to all terms and conditions the offer and subsequent counter
offers. |
