Examining the Buyer’s Offer
Selling a home can be one of the most exciting, yet often daunting, journeys for homeowners. As a seller, the process begins long before a potential buyer puts in an offer and even accepting that offer. It is essential to understand what exactly is included in a buyer’s offer, as well as being armed with the knowledge of how to properly examine it.
The offer outlines a buyer’s qualifications, as well as how they intend to finance the purchase of the home. It also outlines proposed sale details, such as the purchase price, closing costs, and such. As the seller, it is important to understand all components of the offer, as well as any details that are of importance to you.
What Does a Buyer’s Offer Look Like?
A buyer’s offer typically includes a written statement, typically referred to as a “purchase and sale agreement.” This document typically provides information such as the intended purchase price, the buyer’s financing qualifications, any closing costs, and any other details deemed significant.
Additional documents the offer may contain, depending on the buyers intentions for the property, include items such as a loan application, an application for a home inspection, and good faith money documents or a check. This ensures the buyer has the ability to show their investment into the deal and ability to purchase the property.
Examining The Buyer’s Offer: An Overview
When examining a buyer’s offer, it is important to take into account the following aspects:
Purchase Price:
When examining a buyer’s offer, it is essential to consider the proposed purchase price. Often the proposed purchase price is the main component of the offer, and it is important to consider any factors that may sway a buyer’s offer price. This may include the home’s proximity to local amenities, schools, and other factors.
It is important to know that a buyer’s initial offer is typically not their final offer and more than likely will be challenged by the seller. Knowing the “actual value” of the property can give the seller the confidence to challenge an offer if deemed necessary.
Financing Details:
When examining a buyers offer, it is essential to evaluate the buyer’s ability to finance the purchase. This typically includes the buyer submitting financial information to their potential lender, such as income and employment verification, debt and asset records, as well as other pieces of financial related information.
Considering the buyer’s financing details, it is also important to make sure the buyer is pre-approved for a loan by a potential lender. This ensures the buyer has been accepted as an applicant for a loan from the lender and can provide further assurance of the buyer’s ability to purchase the home.
Closing Costs:
Closing costs are typically broken down into two categories: those the buyer is responsible for, and those the seller is responsible for. As the seller, some common closing costs include title insurance and transfer taxes. For the buyer, common closing costs may include loan discount points, origination fees, and seller-paid concessions.
At this stage it is important to review which side is responsible for what costs. Knowing this helps to ensure both parties are made aware of their individual responsibilities and establishes an understanding between both parties of what is expected.
Inspection Terms:
The inspection period is an incredibly important component of the buying process and usually is detailed within the buyer’s offer. During this time, the buyer has the time frame of typically 10-14 days to get their home inspected by a professional inspector.
The purpose of having the buyer inspect the home is to uncover any potential issues, allowing both buyer and seller to address any needed repairs and/or rework the purchase price if need be. It is the buyer’s visibility during the inspection period to ensure the home being purchased is in decent condition and has no known major issues.
Closing Date:
The closing date is when the official transfer of the home takes place, and both buyer and seller have fully agreed and signed all required documents for the sale. The closing date is usually determined by when the buyer has an available loan, as well as any closing costs associated with the purchase.
Due to the fact that mortgages can often take a few weeks or longer to process, the closing date on the buyer’s offer should be in writing. It is important to include specific details of when the closing is expected to occur, such as the month and year, with the agreed upon closing date.
Contingencies:
In most circumstances, a buyer’s offer includes some type of contingency. This typically includes a mortgage contingency, which allows a buyer the ability to secure financing within a set period of time. This contingency provides a certain level of protection to the seller, as it allows them to move on to another buyer if the mortgage process extends beyond the agreed upon timeline.
Another relatively common contingency is the inspection contingency. This provides the buyer, again, with a certain level of protection, as it allows them to back out of the sale if any major issues turn up during the inspection process, again with a set timeline.
When evaluating a buyer’s offer, it is essential to understand each component outlined within the buyer’s offer. This article provides a detailed overview of such components, helping sellers to understand the importance of examining a buyer’s offer. By being aware of what to look for in a buyer’s offer it can help ensure sellers are comfortable and confident throughout the sale process.
