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Tips for Reviewing a Purchase and Sale Agreement (Seller)

01-22-2010
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Tips for Reviewing a Purchase & Sale Agreement (Seller)


When selling your home, it's likely that your primary focus is receiving the highest price possible for your property.  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).

 

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.


  • Understanding the REPC: 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. Your first encounter with a particular purchase contract will be in the form of an offer from a potential buyer. 
  • Considering Your Three Options: 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.
  • Checking for Contingencies: 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 buyer'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. 


  • Structuring a Contingent Sale Offer: 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.


  • Financing Red Flags: 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 you'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 don't sit well with you.


  • Checking What's Required of You: Don't forget to take note of your requirements in the offer. Some buyers will include a clause that penalizes sellers who don'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.


  • Agreeing on What's Included With the Sale: 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 home-whether the washer/dryer, an heirloom rosebush, or all your furniture-it'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, you'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. Explore coldwellbanker.com for more insights and information.

About Coldwell Banker®

Since 1906, the Coldwell Banker® organization has been a premier provider of full-service residential and commercial real estate. Coldwell Banker is the oldest national real estate brand in the United States and today has a network of approximately 83,000 sales agents working in approximately 3,100 offices in 50 countries and territories. The Coldwell Banker brand is known for creating innovative consumer services as recently seen by being the first national real estate brand to create an iPad application and the first to fully harness the power of video in real estate listings, news and information through its Coldwell Banker On LocationSM YouTube channel. The Coldwell Banker system is a leader in specialty markets such as resort, new homes and luxury properties through its Coldwell Banker Previews International® marketing program. Coldwell Banker Real Estate LLC fully supports the principles of the Fair Housing Act and the Equal Opportunity Act. Each office is independently owned and operated.
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