I Just Received an Offer. Now What ?? |
Congratulations. Take a deep breath. Let's get to work. Your number one priority is to read the offer and to understand it and be aware of everything that is being stated or asked for. Most offers should have a deadline for replying to the offer. If you cannot find it, ask the person who is presenting the offer what the time limit is. If they tell you that a reply is requested immediately or they might say "upon presentation", let them know that this is not acceptable. You need time to analyze the offer and you will reply within 24 hours. Most legitimate buyers will accept this time frame. The easiest way to analyze an offer is to first make one or two copies. These will become your worksheets. It is important for you to realize that once an offer has been accepted by both parties, the escrow company that is handling the transaction will rewrite the contract in a format that is acceptable to the escrow company. However, they will not change any of the contents of the offer, rather they will interpret what has been written and present this to both buyer and seller as "escrow instructions". If you do not understand exactly what a buyer is asking, then that means the escrow company might not understand exactly what the buyer is asking for. Anything that is questionable in your mind must be dealt with as an addendum or a counter offer. Now take a deep breath, sit down at an empty table with all sellers present. Take your worksheet, a scratch pad, a yellow hi-lighter, and a calculator. You will now read each paragraph as a separate entity. Most contracts will first identify the buyer and the property. The property might be identified by more than one method: address, assessors parcel number (APN), or legal description (subdivision name and lot number). Take your hi-lighter and accent all relavent information and check to see that it is correct. The next section will normally state the price offered and the type of financing that the buyer needs to purchase. Hint: Do not panic or be outraged about low offer prices that you feel insult your home. Read the entire offer before deciding what you need to address. Negotiating a successful offer is very rarely only about price. The information about financing is of extreme importance to you. You will be required by federal law to pay some of the buyers closing costs when dealing with an FHA or a VA borrower. Some buyers will be asking for you to assist them in paying some or all of the allowable closing costs. Some buyers will ask you to pay discount points in order for them to get a lower mortgage interest rate. When you are a savvy negotiator, you realize that this can be a good thing. Many a deal has been consummated because the seller has helped a buyer who could not otherwise qualify. If you, the seller, are going to help this way, then you are entitled to ask a little more on the sales price. Hint: Keep this thought in mind. "I want to sell this house and the buyer wants to buy this house. " Hey! That means you both have the same goal. This does not have to be an adversarial situation, it could be a time for cooperation. If the buyer needs a mortgage, then an appraisal will be called for by the lending institution. The party who will pay for the appraisal should be stated in the contract. A monetary amount should be stated for appraisal conditions. (These are possible conditions that an appraiser would say have to be fixed in order for the property to attain appraisal value. These could be roof, walls, or foundation problems. They could be broken windows or exterior doors or safety conditions.) This section of the contract will also state who will pay the closing costs. There are many different sales contracts circulating in the local market. Some will be only one page long, others will be six or seven pages long. The following paragraphs might or might not be dealt with in a contract: How long before the buyer applies for a loan. Who will be the escrow company. When is the closing date. Can the buyer occupy the property before the close of escrow. Will there be a home warranty and who will pay for it. Is the buyer asking for time to do any inspections. Who will pay for them. What happens if the inspections turn up any needed repairs. Are there any disclosure forms attached to the contract. Are there any CC & R's or home owner associations attached to this property. Are there any outstanding assessments and who will pay them. (Be careful how you handle LID's or SID's. What personal property remains as part of the purchase price: appliances, window coverings, outdoor furniture, etc. How much earnest money will the buyer put into escrow. How will the earnest money be resolved if the buyer cannot qualify for a loan. Each of these points is important and can be addressed in an addendum or a counter offer. Once a purchase agreement has been signed by all parties, you have a final agreement. It might be very difficult to renegotiate after this time. Take your time with this offer. Fully understand each paragraph. Hi-light, take notes, and remember to ask questions of the buyer if there is a question of interpretation. Calculate what your net return will be after all closing costs. Once you feel confident that you fully understand the offer, you are now ready to compose your addendum or counter offer. You can write these out in plain easy to comprehend language. Write your terms out on scratch paper first. Once completed and checked, transfer your terms and changes onto a counter offer or addendum form. Call the buyer and tell them you wish to deliver this paper work. Each time you receive a counter offer, handle it the same way as you did with the original offer. There is a compromise position that the buyer will accept and that you can live with. It is your task to find that position. |
