What Does A Buyer's Offer Mean?

When you are selling your house, the hope is to sell quickly with the highest return value. That is the reason for all the sprucing up, marketing, and endless showings after all, and the before every sell, there is negotiation between the buyer and the seller. Before you dismiss or wholeheartedly accept an offer, be sure to familiarize yourself with what an offer entails. Here are a few tips and contingencies to look out for when you are reading a buyer's offer.

Do not Judge by Purchase Price.

Whether you are dealing with a real estate agent or selling your home privately, do not make the mistake of judging a buyer's offer exclusively by its purchase price. When comparing offers, you need to look at the bottom line, and the purchase price is not the only part that affects your deal. There is also any number of contingencies to examine as well. Some contingencies will affect you pricewise since they will subtract you from potential profits. Other contingencies may tie up your time preventing you from showing the home to other buyers while the sale is being processed.

Earnest Money Deposit

What earnest money is a portion of money, usually part of the down payment, that the buyer will send to the seller, or have a third party hold, to show that the party buying the house is serious. If the buyer backs out of the sale the seller can keep the earnest money. In many cases there will be several things that have to happen like passing home inspection, obtaining financing for the seller to keep the money. If these things aren't met then the buyer will get their earnest money back.

Seller Concessions

This can be anything that the party buying the house wants the seller to do to the house in order for them to buy it. A buyer could give you a high purchase price but want you to change all of the appliances and put a new roof on the house for them to buy it. Another offer could also offer a high purchase price but want you to pay for all of the closing cost. They could even ask that something be removed for them to buy it. These will usually take away from your final profits as you will still have to pay for them at some point.

Mortgage Concession

This concession usually states that the sale can only take place after the buyer has secured certain mortgage financing. This does not happen too often, but make sure that the terms and the timeframe is realistic. If you are not careful, you may be signing an agreement with a buyer that allows the buyers to shop around for unrealistic terms for as long as they need while your house remains off the market for months.

Buyer Seller Property Contingencies

This is a clause that states that the buyer will go through the process of a sale only after the buyer has sold his current residence. If you sign the document without giving this a second glance, you may be agreeing to a sale that is contingent on the sale of another home. It is important to make sure there is a time limit to this, and often what sellers write in their counteroffer is a kick-out clause. A kick-out clause is the ability to keep the house on the market to prospective home buyers, and if another serious offer comes along, the original buyer will usually have 72 hours to purchase the home or the house goes to next offer.

In conclusion, as with many contracts the devil is in the details, so it is important to see the offer in its entirety and make sure you understand each part. This will be your money and your time that you are investing into the sale, so if you are unsure about the offer, be sure to seek professional help in deciphering the jargon.

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