4. Finalizing the Contract
Beyond price alone, the National Assn. of Realtors and The Garner Group recommend you consider these factors when you are presented with an offer:Estimated transaction costs. These typically include brokers’ commissions, inspections, escrow fees, a title search, an owner’s title insurance policy and recording fees. The mortgage lender will require an appraisal. When the title company opens escrow, you will get a preliminary escrow statement itemizing transaction costs for both parties. As part of the listing agreement, you will be provided with an “estimated proceeds to seller” document.
Earnest money. A big earnest money deposit, held in trust during escrow, is generally seen as a sign the buyer is serious about completing the transaction.
Contingencies. The sale typically will be contingent upon the buyer being able to obtain suitable mortgage financing. The contingency statement should be specific about terms of the loan. A pre-approval letter from a lender indicates the buyer will be successful in obtaining a mortgage. Another common contingency involves sale of the buyer’s current home. Your agent will discuss with you what is desirable and/or realistic. Usually a set period of time is specified, after which the contingency must be removed or extended, otherwise the transaction fails.
Professional inspections. These can be important negotiating tools. The seller may be asked to make repairs out of pocket before the sale can close. Or the seller may respond with an offer to reduce the price by a set amount. The seller is not required to address every item on an inspection report, however.
Furniture, fixtures and appliances. Exclusions and inclusions should be specified in the listing agreement. Technically, anything that is permanently affixed to the home is real property, but this sometimes is open to interpretation. Be specific. If you want to take the dining room chandelier with you, put it in the listing agreement. If you want to leave the refrigerator as an incentive, put it in the listing agreement.
Closing escrow. You will be expected to move out completely before the sale closes. The sales agreement will commit you in writing to a closing date. Leave some wiggle room if you’re also planning to close on the purchase of another home.
Breach of contract. The sale agreement is a binding legal contract. Buyers who fail to perform can lose their earnest money. Sellers who withdraw without reason may incur liability or a forced sale. This is a matter for lawyers and arbitrators to explain. Our only advice is to cross every T and dot every I. Listen to your Realtor®.
Ask your agent to go over the standard contract with you before you receive a purchase offer or make a counter-offer.
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