After you've put your home on the market, potentially interested buyers should start showing up to take a look around; and with any luck, some will take a serious interest in the home. One or more of them may then submit a written offer to purchase your home. This offer takes different forms in different parts of the United States. It's sometimes called an "earnest money contract," sometimes a "residential purchase agreement, and sometimes a "sales contract."
You may not have long to decide whether to accept the offer or to make a counteroffer. Most contracts give the home seller 48 hours or less in which to respond to the buyer.
You don't have to accept the offer, especially if it differs from what you asked for in your listing agreement. Stay calm, cool, and in control, and don't let excitement or stress distract you from making an objective evaluation of the offer.
What's in the Home Purchase Contract Details?
In most states, you can expect to see the below terms in a real estate purchase offer. (In some states, however, such as New York, the offer will be much briefer, and it will be up to you as the seller to draft the actual contract.)
- Purchase price the buyer is offering.
- The street address and possibly a legal description of the property.
- Earnest money amount.
- Down payment amount (and, correspondingly, how much the buyer will seek in the form of a mortgage loan).
- How long the offer will remain open for your acceptance.
- The closing date for the sale.
- Date upon which the buyer may take possession (usually, but not always, on the closing date).
- Who holds the earnest money deposit (usually an escrow agent) and who will be the closing agent and/or escrow or title agent for closing.
- Items to be included in the sale, such as carpeting, lighting fixtures, appliances and so forth
- Specific items not included in the sale
- Assurance that you'll provide clear title to the home, through an abstract of title, certificate of title or a title insurance policy
- Terms for who is responsible for paying expenses related to the property such as utilities, property taxes and homeowners' association fees through the closing date (usually the seller)
- Contingencies such as the sale depends on the buyer obtaining financing, with return of earnest money if he or she can't get a mortgage, or the sale of the buyer's current home
- An inspection clause allowing the buyer to have a professional home inspection within several days of the contract date
- Terms for the buyer's final walk-through to inspect the home's condition immediately before closing
- Terms that you must pay an amount if you don't move out as scheduled; it's usually called "liquidated damages" or payment for use and occupancy of the house
Your real estate agent, if you're using one, can help you understand these various terms and decide whether they are acceptable to you.
As the seller, you're likely to respond to the buyer's offer with a counteroffer, which accepts some terms and proposes changes to others.
Common counteroffer proposals include:
- A higher purchase price.
- A higher earnest money deposit or "liquidated damages" amount, money that the buyer will owe you if he or she backs out of the deal for a reason not listed in the contract. State law may limit the amount.
- Less time for the buyer to remove contingencies such as inspections and selling his or her current home.
- Removing certain contingencies altogether.
- Excluding certain items from the sale, such as your antique stove.
- A change in the closing date to fit your plans.
- Asking to stay in the house after closing (a "rent-back").
- A clause allowing for review of the contract by your lawyer before acceptance is final.
Reaching a contract you and the buyer agree on may take a few rounds of back-and-forth negotiations. Fine tuning the contract can happen quickly, often with a few phone calls between your real estate agents.
Now you and the buyer can move ahead toward the closing.
Questions for Your Attorney
- How firm are the dates and deadlines in the contract for completing steps in the sale, such as getting an inspection and financing?
- Can I still show the house if all purchase offer details aren't worked out yet?
- A married couple wants to buy my house, but only one spouse signed the contract. Shouldn't both sign before we go ahead with the sale?