Receiving an Offer to Purchase
After your house goes on the market, you're ready to begin the formal part of the negotiating process -- receiving an offer to purchase. Unfortunately, no standard, universally accepted real estate purchase contract is used throughout the country. On the contrary, purchase contracts vary in length and terms from one locality to another. The contract you get reflects what, as a general rule, the buyer's agent or lawyer considers to be appropriate for your area.
When you evaluate the offers you receive, check for the following characteristics of a good offer:
- It is based on the market value of your house as established by comparable property sales: Smart buyers don't pull offering prices out of thin air. Instead, they base their offering price on properties comparable to your house in age, size, condition, and location and that have sold within the past six months. Many house sellers' asking prices are sheer fantasy. Sale prices of comparable houses are facts.
- It has realistic loan terms: The buyers' proposed mortgage interest rate, loan origination fee, and time allowed to obtain financing should be based on current lending conditions in your area. Ideally, the buyers are also pre-approved for a mortgage, indicating that they're ready, willing, and financially able to purchase your house.
- Doesn't ask for a blank check: Unless property defects are glaringly obvious, or you already have inspection reports on your property, neither you nor the buyers know whether the house needs corrective work when the offer is submitted. Under these circumstances, consider using property-inspection clauses that allow you and the buyer to reopen negotiations for any necessary corrective work after the buyers get their inspection reports.
If you agree with the price and terms of the buyer's offer, all you have to do to indicate your approval is sign the offer. Your signature turns the offer into a ratified contract-- a signed or accepted offer. However, signing an offer does not mean that you've sold your house. Due to the various contingencies contained in most contracts, ratified offers remain highly conditional until all contingencies are removed.