When you're selling your home and there's a serious buyer, you'll receive a written offer to purchase your home, sometimes called an "earnest money contract," "residential purchase agreement, or "sales contract."
You won't have long to decide accept the offer or make a counteroffer. Most contracts give you 48 hours or less to respond. Be informed and ready for negotiations.
You don't have to accept the offer, especially if it differs from your listing agreement. Stay calm, cool and in control, and don't let excitement or stress distract you.
What's in the Contract Details?
Expect to see these terms in a purchase offer:
- Purchase price the buyer is offering
- The street address and legal description of the property
- Earnest money amount and down payment amount
- How long the offer will be open
- The closing date for the sale, and your moving date
- Who holds the earnest money (usually an escrow agent) and who will be the closing agent and/or escrow 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
As the seller, you'll usually respond to the buyer's offer with a counteroffer accepting some terms and proposing changes to others.
Common counteroffer proposals include:
- A higher purchase price
- A higher deposit
- Giving the buyer less time to remove contingencies such as inspections and selling his or her current home, or removing these contingencies altogether
- Excluding certain items from the sale, such as your antique heirloom chandelier you're taking when you move
- A change in the closing date to fit your plans, or asking to stay in the house after closing
- A clause allowing for review of the contract by your lawyer before acceptance is final
- A "liquidated damages clause" stating how much money the buyer owes you if he or she backs out of the deal for a reason not listed in the contract. State law may limit the amount
The Final Contract
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 and make your way to 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?