Top 5 Items to Be Wary of When You Receive an Offer
By Elizabeth Dougherty
Your Realtor calls and gives you the news you've
been waiting to hear; a buyer has made an offer
on your home. Before you begin salivating in
anticipation, there are a few things to look out
for in any offer before you consider signing it.
Realize that once you sign an offer, it becomes
a binding contract. If you try to reconsider
and not sell your home, you might be sued
for specific performance. Of course, in every
happy HomeSeeker scenario you make all the
right decisions. Both you and the Buyer end up
heading to the closing table, skipping through
fields of wildflowers along the way. Before that
happens though, here are the Top 5 Items to Be
Wary of:
1 Net Offer
These seem like simple words, but they pack a big
punch. What do they mean? When a buyer makes
a net offer, the number they are offering on the
front of the contract is ALL THEY ARE BRINGING
TO CLOSING. Net means net. They are not paying
any other closing costs, pro-rations or fees. Just
these two words should motivate any seller to
read their entire contract before signing it.
2 Contingent on the Sale of Another
Property
If you are not in a hurry to close on your home,
you might consider accepting this contingency.
However, most people don't want to take their
home off the market for months while the Buyer
tries to sell their house. In most cases, if the
Buyer can't sell their home, they will be unable
to buy yours. It also puts you in the position of
wondering whether the Buyer's Buyer will be able
to close.
3 Little or No Money in Escrow
If an offer is made on your home and they
wish to put very little or even zero dollars in
consideration of a contract, watch out. The Buyer
may be making multiple offers at one time and
only closing on the best one, or the Buyer may
be unable to qualify due to insufficient funds
for closing. Ask your Realtor what they think a
reasonable escrow amount should be in order for
you to accept the Buyer's offer.
4 Other Multiple Contingencies
These are sometimes known as "weasel
clauses". There are many of these ranging from
"contingent on approval of accountant' to
"contingent on Buyer's approval of property".
Most contracts already have a home inspection
clause built-in that gives the Buyer time
to inspect. A financing contingency is also
reasonable, as well as a contingency for clear
title. Any other contingencies may fall into the
"weasel clause" category and should be read
carefully.
5 Assignment of Contract
Almost every standard contract has a little box
on it that can be checked to make a contract
assignable. There is usually an added provision
denoting whether the assignment relieves the
original Buyer of liability or not. Be wary of
allowing Buyers to assign contracts. In most
cases, Sellers accept offers from Buyers they
believe can close on their property. If a contract is
assigned to a third party, you have no assurance
the new Buyer is qualified. In fact, you know
nothing about this new Buyer. That can certainly
make for a more stressful closing.
The bottom line is, every word of a contract is
important. Realtors are trained to help you sort
out the finer points of any offer you may receive.
When necessary, they may recommend you seek
legal advice before signing an offer. Whatever
happens, be happy. The more activity and offers
you get on your home, the sooner it will be sold.
Elizabeth Dougherty, a resident of
Auburn, is a former Real Estate Broker
and Mortage Broker. She can be
reached at EADougherty1@aol.com.
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