Tips for reviewing a sales contract

Tips for reviewing a sales contract

When selling your home, your main focus is likely to be receiving the highest possible price for your property. And while this is certainly an important factor, there are other details that need to be considered when you receive an official offer on your home in the form of a Real Estate Purchase Agreement (REPC). Negotiating this lengthy, legally binding document may seem daunting, but understanding the information contained in the REPC will save you time, money, and headaches during the home sale process.

The Real Estate Purchase Agreement, also known as the Purchase and Sale Agreement, or 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. 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 reject 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 on 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 the buyers deposit is usually returned. There are ways to structure a standby 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 hopes of finding a better deal. If such an offer appears, sellers notify buyers that they must remove the contingency by a certain date and prove that they can close. Otherwise, they must withdraw from the contract. Sellers are then free to continue with the other offer.

Another red flag to watch out for is a request by the buyer for excessive time to secure financing. This is true for many first-time homebuyers or even veteran buyers whose credit is poor. If you are not comfortable with the extended time frame, you can request that the buyer provide you with proof of loan application and/or loan qualification letter by a certain date. A good price offer may also seem 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 sit well with you.

And don’t forget to write down 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 asking price is lower than you wanted, a buyer who can close and take possession quickly can offset the lower price.

It is generally accepted that all attached fixtures and appliances will be sold with your home, but the buyer should list them carefully in the offer to purchase. Such appliances and fixtures can include ovens and dishwashers, window treatments, lighting fixtures, mantelpieces, 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, whether it’s the washer/dryer, a family rose bush, or all of your furniture, it’s a good idea to tell your real estate agent up front. so you 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 house on the market. That way, when you receive an offer, you’ll be ready to break it down into details and respond with confidence.

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