When selling your home, your main goal is likely to be to receive the highest possible price for your property. And while this is certainly an important factor, there are other details to consider when you receive an official offer on your home in the form of a Real Estate Purchase Contract (REPC). Negotiating this lengthy and legally binding document can seem overwhelming, but understanding the information in the REPC will save you time, money, and heartache during the process of selling your home.
The Real Estate Purchase Agreement, also known as the Purchase and Sale Agreement, or Real Estate Agreement, is an agreement between a buyer and a seller to purchase real estate. 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: accept the terms of the offer, thereby entering into a contract; change the terms of the offer into a counter offer; or decline the wholesale offer.
After considering the price offered by the buyer, smart sellers will determine if the Real Estate Purchase Agreement contains any contingencies. A common possibility is that the offer to purchase your property is contingent upon the sale of the buyer’s home. If the buyers’ property is sold, the sale goes through. But, if not, the sale is canceled and buyers’ deposit is usually returned. There are ways to structure a contingent sale offer so that it is less risky for sellers. One way is to include a release clause in the contract, which allows sellers to continue to market their home in hopes of finding a better deal. If such an offer is submitted, sellers notify buyers that they must eliminate the contingency before a certain date and demonstrate that they can close. Otherwise, they must withdraw from the contract. Sellers can continue with the other offer.
Another red flag to watch out for is the buyer’s request for excessive time to secure financing. This is a reality for many first-time home buyers or even veteran buyers whose credit is low. If you are not comfortable with the extended term, you can request that the buyer provide you with proof of loan application and / or loan qualification letter before a certain date. A good-value offer can also appear less attractive if the seller offers a low security deposit or asks you to pay closing costs. Feel free to counter any element of the offer that doesn’t suit you.
And don’t forget to make a note of your requirements in the offer. Some buyers will include a clause that penalizes sellers who do not move out of the property by a specific date. Rest assured that you can vacate your home on the requested date before accepting the offer. On the other hand, you may want the closing process to move quickly. Even if the offered price is lower than you wanted, a buyer who can quickly close and take possession can offset the lower price.
It is generally accepted that all attached fixtures and appliances will be sold with your home, but should be carefully listed by the buyer in the offer to purchase. Such appliances and accessories can include ovens and dishwashers, window treatments, light fixtures, mantels, and even landscaping items like trees and flowers. In addition, buyers can request the inclusion of certain furniture and personal property. If you have items you don’t want to include when selling your home, be it your washer / dryer, a heirloom rose bush, or all of your furniture, it’s a good idea to let your real estate agent know up front, so he or she can help mitigate buyers’ expectations.
The bottom line? It’s worth spending 20 minutes reviewing a blank real estate purchase contract as soon as you put your home on the market. That way, when you receive an offer, you are ready to break it down into its details and respond with confidence.