Tips for Reviewing a Purchase & Sale Agreement
When selling your home, itâ€™s likely that your primary focus is receiving the highest price possible for your property.Â And while this is certainly an important factor, there are other details that must be considered when you receive an official offer on your home in the form of a Real Estate Purchase Contract (REPC).Â Negotiating this wordy and legally binding document can seem daunting, but understanding the information contained in the REPC will save you time, money and heartache during the process of selling your home.
The Real Estate Purchase Contract, also known as a Purchase and Sale Agreement, or a Real Estate Contract, is an agreement between a buyer and a seller to purchase real estate.Â Your first encounter with a particular purchase contract will be in the form of an offer from a potential buyer. After reviewing the offer, you have three options: to accept the terms of the offer, thus entering into a contract; to change the terms of the offer in a counter-offer; or to reject the offer wholesale.
After considering the price offered by the buyer, savvy sellers will then determine if the Real Estate Purchase Agreement contains any contingencies. One common possibility is that the offer to purchase your property is contingent on the sale of the buyerâ€™s home. If the buyers' property sells, the sale goes through. But, if it does not, the sale is off and the buyers' deposit is usually returned. There are ways to structure a contingent sale offer to make it less risky for sellers. One way is to include a release clause in the contract, which allows sellers to continue marketing their home in the hopes of finding a better offer. If such an offer comes along, the sellers notify the buyers that they must remove the contingency by a certain date and show that they are able to close. Otherwise, they must withdraw from the contract. The sellers are then free to proceed with the other offer.
Another red flag to watch for is a request by the buyer for excessive time to secure financing. This is a reality for many first-time home buyers or even veteran buyers whose credit is spread thin. If youâ€™re not comfortable with the extended time frame, you can request that the buyer provide you with proof of loan application and/or a letter of loan qualification by a certain date. A well-priced offer can also seem less appealing if the seller offers a low earnest money deposit or asks you to pay the closing costs. Feel free to counter any elements of the offer that donâ€™t sit well with you.
And, donâ€™t forget to take note of your requirements in the offer. Some buyers will include a clause that penalizes sellers who donâ€™t move from the property by a specific date. Be confident that you can vacate your home by the date requested before accepting the offer. On the other hand, you may want the closing process to move swiftly. Even if the offered price is less than you wanted, a buyer who can close and take possession quickly can counterbalance the lower price.
It is generally accepted that all attached fixtures and appliances will be sold with your home, but the buyer must list these carefully in the offer to purchase. Such appliances and fixtures can include ovens and dishwashers, window treatments, light fixtures, fireplace mantels and even landscaping features like trees and flowers. Additionally, buyers can request the inclusion of certain furnishings and personal property. If you have items that you do not wish to include when selling your homeâ€”whether the washer/dryer, an heirloom rosebush, or all your furnitureâ€”itâ€™s a good idea to let your real estate agent know from the get-go, so he or she can help mitigate the expectations of buyers.
The bottom line? It pays to spend 20 minutes reviewing a blank real estate purchase contract as soon as you put your house on the market. That way, when you receive an offer, youâ€™ll be ready to break it down into its specifics, and respond confidently.
The staff at Coldwell Banker Real Estate LLC writes select articles about important topics related to real estate. For more information about buying a home or selling your current property, visit ColdwellBanker.com today.