Escrow

For a seller who has had their house on the market for some time, receiving a call about an offer can be a thrilling experience. Initially, there’s a rush of excitement, but then reality sets in, and worries about the offer not meeting expectations start creeping in.

Agents typically refrain from disclosing the price offer over the phone because there are numerous other factors to consider beyond just the price, such as contingencies, seller concessions, and real property requests.

It’s crucial not to solely focus on the price; instead, carefully examine the entirety of the offer, particularly considering how much net profit you stand to gain.

Your agent should be capable of explaining the different sections of the contract, but having prior knowledge of real estate contracts is advantageous. While specifics may vary by state, the general structure remains similar.

Here are the fundamental components you can anticipate in a contract:

1. Earnest Money Deposit: This deposit demonstrates the buyer’s sincerity and is often held by a third party like an escrow, attorney, or broker’s trust account. It’s typically applied towards the downpayment and returned to the buyer if the sale falls through.

2. Purchase Price: While this is of primary interest, it’s essential to consider what else the buyer is proposing.

3. Mortgage Contingency: This contingency outlines the terms of the buyer’s loan, including the term, rate, and time limit, which must be analyzed carefully to ensure realism and prevent being tied up unnecessarily.

4. Seller Concessions: Buyers may request various concessions, especially in less competitive markets, though in hot markets, these requests tend to be minimal.

5. Inspection Contingencies: These allow buyers to back out if inspections reveal significant issues, and they should be reasonable.

6. Personal Property: Buyers can request items physically attached to the house, while sellers can specify items to be removed before closing.

7. Appraisal Contingency: This ensures that the house’s appraised value meets the sale price, which can be complicated if there are significant concessions involved.

8. Buyer Selling Property Contingency: This applies when the buyer needs to sell their property first, potentially prolonging the process. A kick-out clause can protect sellers from extended delays by allowing them to continue marketing the property if another offer arises.