Contracts and Negotiations

The natural focal point of a real estate purchase contract is the selling price of the home, but the price isn't the only factor that determines the net bottom line for both the buyer and the seller.  Here are five bottom-line points to consider:

1. What are the estimated transaction costs and who will pay for what?
2. How much money is the buyer putting into escrow and how soon?
3. Is there a mortgage financing contingency and how specific is it?
4. What furniture, fixtures and appliances, if any, are being sold with the property?
5. What will happen if either side breaches the contract?

Most home buyers and home sellers want to arrive at a win-win agreement, but that's not to say either side would regret getting a bigger "win" than the other. Successful negotiating is more than a matter of luck or natural talent. It also encompasses the learned ability to use certain skills and techniques to bring about those coveted win-win results.

When you receive an offer, your agent should include a Seller's Estimate of Net Proceeds form, outlining all the fees, costs and taxes that will be deducted at closing.

Some additional points you need to consider when receiving any offer are:

1. What are the cutoff dates for inspections and approvals of the inspection reports?
2. Who is responsible for making repairs, if any, as a result of the inspections?
3. Are you, as the seller, making any representations or warranties regarding the condition of the property?
4. Is a home warranty plan being requested, and if so, who will pay for it?
5. When is escrow scheduled to close?

Pay attention to that last one regarding when the sale is scheduled to close! If you're selling your home, you'll be expected to move out completely before the property changes hands. You'll want to make sure the closing date doesn't fall before you're able to move into your next residence. Don't cut the dates too close. Many escrows end up closing a day or two later than the contract states--but that can happen only with the mutual agreement of the buyer and seller.

The day of the closing (or possibly the day before), the buyer will do a "walk through" of the property to make sure all agreed repairs are completed and that the home is in the same condition as when the buyer made their offer. If problems arise at this point, the closing can still take place with funds held in escrow to remedy the problem.

Closings usually occur 30 - 45 days after you have signed the sales contract. Depending on what state you reside in, you may close with an attorney, or with a title company. At the closing, all monies will be collected, any existing loans or liens will be paid, the deed will be transferred, and insurance will be issued insuring a free and clear title. The home seller typically receives the proceeds of their home one business day after the closing.

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