Selling a home can be complicated, especially after the seller receives the offer to buy the home. The home purchase agreement is a complicated document that can be baffling to home sellers, especially if they haven't bought or sold a Goodlettsville home in a very long time. Understanding the basics of the home purchase agreement can help homeowners when they discuss the offer with their agent and then decide whether or not to accept an offer, counter an offer or ignore an offer.
Home Purchase Price
The purchase price is what people focus on the most when they get the initial offer. While many home sellers dream about getting an offer that is close to (or even over) the asking price, it's common for home buyers to make an offer that is below the asking price, sometimes far below. This, of course, is usually not the case in hot markets where the offer is either at the asking price or higher. The offer price then kicks off the negotiation process, which often results in a home sale price that is hopefully fair for both parties.
Home sellers who consistently get offers below the asking price may need to examine whether or not the listing price is competitive for the area. Working with a real estate professional can help ensure that the asking price is right for the home.
The contingencies are clauses written into the contract that enable the home buyer to back out of the contract without losing earnest money under certain situations. The three most common contingencies include:
- Appraisal contingency. This enables the home buyer to cancel or renegotiate the contract if the home does not appraise at an amount that is equal to or above the purchase offer.
- Inspection contingency. This allows the buyer to have an inspection on the home. If the home inspection reveals serious problems with the property, the inspection contingency allows the home buyer to negotiate repairs or credits, renegotiate the price or possibly even cancel the contract altogether.
- Financing contingency. If the home buyer's mortgage loan does not fund, the financing contingency usually allows the buyer to walk away from the home purchase.
Cash Vs. Mortgage
Some buyers will pay in all cash, some will pay with a loan. This information is detailed in the contract for the seller to consider. Buyers who pay with cash are often favored over buyers who pay with a loan, since a loan can fall through at the end of the buying process, causing the entire deal to be canceled. Home buyers who pay with cash do not have the possibility of backing out due to financing, so once the other contingencies are lifted, the seller is almost guaranteed that the the sale will go through.
A home sale happens on a timeline. This timeline can change throughout the process as home buyer and home seller negotiate certain points of the contract. Still, the initial purchase offer agreement will lay out a tentative timeline to ensure that both parties are on the same page. Usually the close of escrow happens around 30 to 45 days after the agreement is first signed, but sometimes sellers and buyers choose to negotiate a longer timeline if one is needed.
In most states, a home disclosures form must be filled out by the seller and made available to all buyers. This form details the history of the house regarding certain repairs, known defects and other events that may impact a buyer's decision. For example, many states require buyers to disclose if and when the house has been flooded or has had any major repairs or addiitions.
This disclosures form is an important part of the home purchase agreement, and if it is not filled out properly and honestly, the home seller might be held liable for any problems down the road. It's important to work with a real estate professional to ensure that this document is filled out properly.
Work With a Real Estate Agent
A good real estate agent can answer questions about the home purchase agreement to ensure that the seller understands the entire document and what it means. For more information about your home purchase agreement, talk to your real estate professional today.
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