The buyer has made an offer for your home and has written up an offer to purchase agreement. If you have not looked at a real estate contract, it might be a good idea for you to study one. By studying a blank real estate contract it will give you some insight and will make the buyer’s offer easier to understand. You will be able to recognize terms being used by the buyer, which are not standard.
If the buyer has made any additions in the "special clause" box, which is located above the signature, you will want to read and understand the non-standard demands. The buyer may ask you to cover a portion of the closing cost, which you are not normally responsible for. Or the buyer may demand you move by a specific date.
There are some demands you might want to watch out for. The purchase is dependent on the sale of the buyer’s home. The buyer wants an excessive amount of time to obtain financing to purchase your home. The buyer has a very low dollar amount as earnest money. Normally the dollar amount in earnest money is $500 to $2000. A penalty is enforced if the seller cannot move by the buyer’s specified date. The buyer requires the seller to pay the buyer’s mortgage costs. These items could incur problems such as a delay in the sale of your home and additional costs to you.
Make sure the buyer has been pre-approved or pre-qualified for a mortgage loan large enough to purchase your home. If the buyer is making the offer prior to either one of these, do not sign the offer.
After you have looked over very carefully the buyer’s offer, there are several options available to you. One is to accept the offer as is. This can be accomplished by simply signing the offer agreement making it a sales contract. Some states require you sign a separate agreement, which is called a “binder”.
Another option would be to make a counter offer. Make notes on the sales agreement and cross out unacceptable conditions on the offer. You could just fill out your own sales agreement enabling you to stipulate the conditions you want in place.
The last option is to reject the offer all together.
You will want to keep in mind if the offered price is lower than you had in mind, look closely at the offer. Are there conditions, which will compensate the lower price?
Some seller will not sign an offer agreement until they have received a minimum of $500 earnest money, however if you have judged the buyer to be a serious buyer, you can do without the earnest money. The earnest money check should be made out to you, but held by a third party such as your real estate attorney or the buyer’s real estate agent). This check is non-refundable should the buyer default on the contract.
Even though you have signed an offer, you can accept a backup offer. The buyer with the backup offer must be aware of the current pending contract on the house with the first buyer.
