Real Estate This Week - We Have An Offer; Now What?

by Mark Stallmann, GRI, ePRO
Chief Executive Officer
St. Charles Association of REALTORS®

The day you have been anxiously waiting for has finally come! Your REALTOR® called with some great news. Someone has made an offer to purchase your home! You and your spouse start to celebrate, and pictures of the proceeds check and the new house you want pop into your head!

Life is good until your REALTOR® comes over and drops an eight-page contract on your kitchen table. You look at the document and then at your REALTOR® with hopes that he/she can tell you what it all means. The contract you are looking at is probably the standard sales contract used by REALTOR®s in this area. This contract was written by Association attorneys and is regularly reviewed and updated to keep pace with court decisions, government rules and regulations, and other factors that influence the real estate transaction.

Under Missouri law, REALTOR®s can fill in the blanks on contracts approved by their Association or by the legal counsel for their broker. Your REALTOR® is familiar with the contract and can help you review and respond to the offer you have received. You have the right, if you desire, to have your attorney review the contract.

There are several very important parts of the contract that you should review when deciding if the offer is acceptable to you:

• Acceptance Deadline: The contract will state how much time you have to accept the buyer’s offer on your house. If you do not respond by this deadline, the buyer is not bound to the contract.

• Price: Is the buyer willing to pay what you want for your house? Is he/she offering you a fair price? Remember that it is the marketplace and what a ready and willing buyer will pay that determines value. Your REALTOR® will help you determine if the offer is consistent with other sales in your neighborhood.

• Personal Property: The contract lists many items that are included with the house. These include ranges and ovens, light fixtures, window hardware, etc. The buyer may add other items that he/she wants you to leave with the house. This might be the refrigerator, your child’s backyard play structure, your draperies, etc. Only you can determine if you are willing to leave these items at the price being offered.

• Earnest Money: The contract calls for the buyer to provide earnest money, which will be applied to the purchase of your home at closing. This earnest money may be forfeited by the buyer if he/she fails to complete the purchase; therefore, the larger the earnest money the better. A very small earnest money deposit could indicate a weak buyer. This money is held in escrow by either the REALTOR® or title company.

• Closing and Possession Dates: Do the dates chosen by the buyer to close the
transaction and take possession meet your timetable?

• Financing Contingency: Most people cannot afford to pay cash for their home, so most offers are contingent on financing. Your potential buyer has until the date listed in the financing contingency to notify you that he/she cannot obtain financing under the terms outlined in the contract. If the buyer cannot obtain financing, he/she can get out of the contract and have the earnest money returned. If the buyer does not notify you or your agent that he/she cannot obtain financing by the loan commitment date, the financing contingency is waived and you proceed to closing.

• Building Inspection Contingency: The contract has a default time of ten days for your potential buyer to obtain inspections on your home. If he/she asks for more time, you will want to find out why. The inspections are at the buyer’s cost and can cover structure, roof, electric, plumbing, etc. After the buyer has received the inspection reports, he/she can accept the home “as is,” ask you to make repairs or credit the money to make the repairs, or cancel the contract. If the buyer cancels the contract, he/she is entitled to the return of the earnest money.

These are some of the items to look for in your review of an offer on your home. Your REALTOR® will provide you with guidance in reviewing the offer and assistance in preparing a counter-offer if needed. Your REALTOR® is dedicated to guiding you through the home-selling process.