When a buyer decides to make an offer on your home, his or her real estate agent will submit a signed purchase agreement. Once signed by all parties, this agreement constitutes a legally binding contract so it’s important that you understand every single word.
The five most important aspects of the agreement are:
- The offer price.
- The amount of the earnest money.
- The closing date.
- The contingencies.
- Seller-paid closing costs.
When we receive the offer, we’ll go over it with you, paying close attention to not only the aforementioned items but also the following:
- Buyer's loan preapproval
The purchase agreement should be accompanied by a loan preapproval letter from the buyer's lender. Without this document, you have no way of knowing if the potential buyer is even qualified to buy your home.
At the very least, the letter will state the amount of the loan that the buyer is preapproved for and any conditions to the preapproval. For instance, the lender may make the approval of the loan conditional on a clean title report, an appraisal and any changes to the buyer’s finances.
The preapproval, however, isn’t a loan guarantee. Any number of things may happen between preapproval and closing that may cause the lender to deny the loan.
These are conditions placed on the offer. One common contingency has to do with the buyer obtaining financing for the home. Another is that the home inspection results are acceptable to the buyer.
Contingencies are negotiable. So, while it is reasonable for the buyer to submit an offer contingent on having the home professionally inspected and approval of the results, it is unreasonable to ask for 45 days to obtain that inspection. Other contingencies should be likewise considered carefully, weighing them against the offer price.
Not only will we go over the contingencies in the contract we will also look at how much time the buyer is asking for in each one.
Never sign a purchase agreement unless and until you understand the terms. Every clause within the agreement has a purpose and it is imperative that you understand all of them.
While we are not attorneys and cannot provide you with legal advice, we will do our best to answer any questions you may have about the purchase agreement.