Whether you are selling your house with an agent or “for sale by owner” you need to be prepared for what to do next when you get an offer on your house. There are 7 terms to be agreed upon between you and your buyer. It’s not just about the price!

If you are are using an agent, they will guide you through the process. If you’re selling your house FSBO (for sale by owner) and you got an offer, you need to fully understand the process, especially if your buyer is working without an agent. You must take the lead!

The first term that everyone focuses on is price. You can accept, reject, or make a counter offer to an offer that has been made. You should always make a counter offer. It’s expected. If you said “yes” right away, the buyer would feel they offered you too much!

Agents make offers and negotiate via faxed contracts. If you are selling your own house, feel free to use fax or email to make counter offers. It’s always good to have a written record rather than relying on memory of “who said what”, anyway.

Before getting a sales contract signed, you and your buyer will need to agree on the following terms:

Sales Price

Remember to take into account real estate commissions. Since you are selling “for sale by owner”, if your buyer is working with an agent you will need to pay their commission which will usually be 3%. If your buyer is not working with an agent, there will be NO commission to be paid! Under rare circumstances, if your buyer wanted your house bad enough, they might even pay their agent the commission. This usually only happens in a “hot” market.

Earnest Money Deposit

At the sales contract signing, a buyer needs to give you an earnest money deposit, made out to the agreed upon title company. Typically, you want to collect at least 1% of the sale price.

Down Payment

This is the amount of money the buyer needs to come up with at closing from a source besides their loan. The minimum amount needed is determined by the loan program the buyer will be using.

Closing Costs

Decide how the closing costs will be divided. Some buyers will ask for closing cost assistance. In many parts of the country, the division of closing costs is customary. However, this is a point that can be negotiated.

In my state, for example, they are usually divided 50/50; however, a seller can offer to pay 100% if that would make the difference between the deal going through or not. Talk to your mortgage broker about how this would work with the particular loan program your buyer is using.

Contingencies

Contingencies let buyers cancel a contract without penalty. It is in your best interest for there to be as few contingencies as possible. Some typical ones include loan, inspections, appraisal, and contract contingent on buyers selling their own home.

Other Property

Generally, everything attached to the house stays with it. If you really want to take your fridge with you, put it in the contract.

Date of Possession

Decide on a date that you and the buyer want to close.

When you come to an agreement on the price and all the terms, a sales contract can be signed by both you and the buyer. Any required disclosures will need to be signed, too. These differ by each state, but some examples are lead paint, notice of defect, and mold. You can get these online, from your agent, or from your real estate attorney. The buyer also needs to provide an earnest money deposit.

When all documents have been signed and the deposit has been presented, your house is now officially “under contract”!

Deane Alban is co-owner of Pretty Nice Properties a full service real estate investment company. She is the author of “The Truth About FSBO – Complete Selling System”. She has a blog at http://truthaboutfsbo.com/blog where she answers homeowners most pressing questions about selling their house for sale by owner. Her advice is relevant for anyone trying to sell a house in today’s market – homeowners selling FSBO or with an agent, as well as fellow real estate investors.

By Jan McBee

One thing to remember when you begin to negotiate with a buyer is that it’s business and not personal. Sure, there are personal aspects of the sale of the home for both buyer and seller, but keep in mind they’re separate from the deal itself. Your objective is to sell your home at a fair price. Do your best to keep feelings and emotions to the side, even if the buyer is not as good at doing so.

A quick word on Fair Housing: As a seller, you must know that when selling your home, it’s illegal to show “any preference, limitation or discrimination based on race, color, religion, sex, handicap, family status or national origin or an intention to make any such preference, limitation, or discrimination.”

The Starting Point

When the time comes to negotiate, have the buyer make an offer. This is the starting point. They know how much you’re asking for your home; it’s up to them, now, to tell you what they want to pay. A buyer can make a verbal offer, but it’s best to put it into writing as soon as possible. Use a standard Contract to Purchase form, which can be found easily on the Interent. In addition to the purchase price, there are provisions on the form for items such as fixtures that will remain in the home, financing contingencies, closing expenses and more. All of these are negotiable.*

Here’s an important note: Part of negotiating is never tipping your hand by telling he buyer what your lowest acceptable price is. This seems obvious, but it’s surprising how many sellers let it slip. Savvy buyers will start there and try to work the price down even further.

Considering an Offer

When you receive an offer on your home, your options are to accept it, reject it, or make a counteroffer in which you negotiate the price or make some other concession, such as offering to pay the buyer’s closing costs or pay for the cost of a repair to the home. When an offer comes in, study it carefully. You should consider any reasonable offer made on your home. An offer that at first appears ridiculously low may bounce up to something close to acceptable after you make your counteroffer. Buyers often test the seller to see how much they’ll budge. With your counteroffer, you’ll get a sense of how much the buyer will budge.

When considering an offer, calculate your bottom line. The price a buyer offers may appear acceptable, but they may want you to pay their closing costs, which could cost you thousands more. Carefully go through the offer and add up everything.

Closing Date

Another consideration is time. Even if you’re not in a hurry to sell your house, a closing date several months away can be risky because it in effect takes your house off the market. If the buyer backs out for any reason, you’ve lost valuable time.

Earnest Money

An offer will come with an earnest money amount. This is the amount of money the buyer will give up front as good faith money once the offer is accepted. This money will go to your attorney and will be held in an escrow account until the closing. The amount of the earnest money will be applied to the purchase price of the home. The larger the earnest money check, the more serious the buyer. A buyer stands to lose this money if they back out of the deal for any reason not specified in the contract.

Look at the earnest money amount in the offer. If it appears low – for instance if you feel it wouldn’t hurt the buyer too much to lose it if the deal fell through – ask for more. Instances in which you would want an even larger amount of earnest money include a contract with a far out closing date or a contract that requires you to make modifications or repairs to the home that you would otherwise not make.

Pre-qualified Buyers

Before accepting an offer, make sure the buyer is pre-qualified and can afford to purchase your home. You don’t want to tie your house up for any period of time only to find out that the buyer can’t afford it. If the buyer hasn’t been pre-qualified, send them to your banker before accepting the offer.

Another option is to qualify the buyer yourself, though this does not give you the security of a lender’s certified pre-qualification.

Accepting an Offer

Don’t accept an agreement until your attorney has reviewed it first. He’ll identify any shortcomings that otherwise could cost you time, money and possibly even litigation. In addition, he’ll provide all of the other necessary paperwork to complete the sale of your home.

Once your attorney has looked over your agreement, both you and the buyer will sign it. Congratulations. You’ve successfully negoatiated the sale of your property.

*Any form used to negotiate the price and other contingencies of the sale should be used for informational purposes only between you and the buyer and should not be signed by you or the buyer until your attorney has had a chance to review them. This is an added safety measure that could save you time and money later on.

Here are examples of a Contract to Purchase agreement and other real estate forms. If you decide to prequalify a buyer yourself, get your attorney to advise you on how to do so.

Jan McBee is a senior writer and research adviser for DwellWell.com.

Are you a seasoned negotiator?  Or are you kicking yourself because someone out-negotiated you?  Add your experiences to this topic in the comments below.

By Brendan Leahy

Anyone involved in the real estate process is aware that transferring property ownership can be a very sensitive matter. From the point homeowners put their home on the market to when the new owners take possession, every step is recorded and formalized through various real estate forms.

There are so many forms that sellers will come across but only one form gives them the great joy and exhilaration that they anticipate; this is the “offer to purchase real estate form”. Once the property seller has received this form in their hand, they know they have a buyer interested in taking the home off their hands. In fact, the seller may have met the prospective buyers in person or interviewed them by phone.

This “offer to purchase real estate” form is important for two reasons:

- First, it’s a sign that the sale of the home is beginning.

- Second, it has an effect on both the seller and buyer that will change their lives.

It will establish how much the buyer is willing to purchase the property for and how the money will be given. It will indicate what the down payment will be, the deadline for the remaining balance, how the payment will be made and the deadline for these payments and more.

It’s important to note that the purchase form details are not final. Should the seller not be pleased by what the buyer offers, he/she can counteroffer to get the buyer’s approval. This counter-offering process continues until the parties are able to reach an agreement and both are satisfied and happy with the outcome.

While individual homebuyers can decide to prepare their counteroffers, it’s in their best interest to speak with a lawyer who has experience in this area or a real estate agent, all in the effort to verify if the form and its content meet the state and federal guidelines. Another option buyers and sellers have is to use a ready-made offer forms that can be bought and/or downloaded from the Internet.

These forms are every bit of good as the ones lawyers or agents prepare. They’ll contain all the needed information that’s important to the real estate transactions and will follow all the standard formats seen with conventional documents. Should a state need a specific format, make sure you obtain the ones for your state. You can buy these “offer to purchase” real estate forms one of two ways: either by one-piece or as a complete set. A person can decide whether to get the form’s full set or piece-by-piece set.

Any counter proposals need to be recorded and attached with the initial documentation that was presented to the home seller. These other documents will give the other documents support and will be a part of the final purchase price contract.

If you would like to get more info from Statewide Homes, LLC on topics like this one and many others go to http://www.StatewideWholesaleDeals.com.

Additional Resources:

1. Law Depot Real Estate Purchase Agreement
2. US Legal Forms – Real Estate Agreements

Thirty and forty years ago it was not uncommon for a seller to finance his buyer, in other words to carry the note for the buyer. In fact, many of those contracts were still being created 20 years ago, but with a mortgage market that became intensely competitive and focused upon getting everyone possible into a home, seller contracts faded.

Seller contracts around the U.S. faded for two specific reasons. First, buyers could find lower interest rates and higher loan to value ratios than sellers could reasonably offer for the risk. Second, sellers were favored by IRS treatment, which has reduced the capital gains tax threat for anyone selling their own home.

For a retired person who wants to sell their own home (and especially a rental or investment property), it might be a great time to consider financing the buyer.

In Washington there are two ways to carry the contract for a buyer:

1. A Deed of Trust and a Promissory Note; or
2. A Real Estate Contract, aka Land Contract.

Provided the seller still does his due diligence on the buyer (credit report, job history, references), and provided the seller gets a reasonable down payment, a seller can get a higher interest rate than a mortgage broker. The higher interest rate is justified, because it is a private contract and the seller bears the risk of default and foreclosure (or forfeiture in the case of a real estate contract).

The risks can be quite acceptable, because the seller is well secured by the real estate itself. If the seller has to foreclose, he probably makes even more money, since he keeps the down payment, all the monthly payments, and then re-sells the house at what may be an even higher price (or at least the same price). Of course, there may be some repairs required after a foreclosure, but it can still be lucrative, and in a market that has slowed down, this could be the key to selling the house now!

Of course, if the seller needs lots of cash now, he does not have this option. One last tip here. A seller can sell the note and promissory to a commercial note buyer at a slight discount. This would be a cash out (talk to your CPA about possible tax consequences). How much of a discount? That depends on the interest rate, the security, the buyer’s credit and so on. The competition for good secured notes has heated up in the last 10 years, and now some notes are selling for only a 1% to 3% discount. That’s pretty darn good. I used to work for the largest note buyer in Washington, and the discounts we got then were much higher (often 30%).

Even a 5% to 7% discount on a $200,000 note could still be reasonable, especially in this market. And here’s a super tip: You may be able to increase the price to cover some of the discount. Someone who must ask you as a seller to carry the note is someone who will most likely agree to add some of the discount (or all of it) to the purchase price.

It’s good to know your options in today’s changing real estate market. Be careful in all of this. Get good professional advice, because as always, there are traps for the unwary.

__________________________

Chuck practiced real estate law for 20 years before coming back to his first love, real estate sales and transactions. He practices on the beautiful Olympic Peninsula in Washington.

Article Source: EzineArticles.com

1. Find the Expiration Date

There should be an expiration date and possibly time in your offer that you need to be aware of.  Most buyers are considerate and at least give you enough time to sleep on it.  Use this time to think it over.  If you are given a short deadline, ask why.  Often times if a buyer thinks someone else is interested, they may shorten the deadline to get their offer accepted first.

2. Research Your Costs.

Collect the principal balance on your mortgage, and ask a closing office to help you estimate what closing and escrow costs you can expect.  These numbers are important to have so you can tell if you will walk away from closing with a check or have to bring a checkbook to closing.

3. Do The Math.

In order to know what the bottom line is on your offer, you will have to do some math.  The number that appears to be the price the buyer is offering isn’t the bottom line.  You may need to subtract some things.  Is the buyer asking you to pay closing costs, make repairs, pay their agent’s commission?  Add these things up and subtract it from the number they are offering.  The answer will be the REAL offer that is being made.

4. Alert Other Interested Parties

Multiple simultaneous offers is your best case scenario.  If you don’t appear to have that, tell other interested parties that you are receiving an offer so if they want to put their hat in the ring, they know to act quickly.

5. Utilize Experts

Real estate transactions are often the largest ones you’ll have in your life.  Don’t let emotions or the buyer’s agent rush you through it without consulting with qualified advisors.  If you belong to a group legal plan, fax the offer to them for review.  If an agent is helping you buy your next home, ask if they will look over any offers you receive on the one you are selling.

1. A local real estate attorney
2. Law Depot Real Estate Purchase Agreement
3. US Legal Forms – Real Estate Agreements