A Home Seller’s Guide: From Offer To Contract To Close

Congratulations, you got an offer on your home! Now comes the tricky part: navigating the waters between your buyer’s offer and the successful closing of the sale. In between, there will be contract negotiations and numerous other steps. With patience and an eye for detail, you’ll reach the end with a minimum of pain and stress.

Turn An Offer Into A Contract And Close The Deal

Full disclosure. You are required by law to provide information on the structural, environmental and legal status of your home as it might influence a buyer. This information is typically provided on disclosure forms as defined by your state. You’ll need to have your disclosure forms in order before accepting an offer for your home.

Offer review. Once you’ve received an offer on your home, be sure to review it carefully. Pay particular attention to the offer price, any contingencies that will rescind the offer and details of timing like proposed closing date and when the offer expires. The buyer’s offer is your first chance to develop your negotiating strategy and decide on counteroffers if the offer doesn’t match your expectations.

Contingencies. Contingencies protect the buyer, allowing her to walk away or renegotiate if the conditions of the contingency aren’t met. Typical contingencies include requirements for appraisal and inspection, the securing of financing and the completion of repairs that result from a home inspection. Closing and other costs may also be subject to contingency agreements. Any or all of these requirements may be negotiable. A savvy seller may be willing to concede to a contingency as an alternative to lowering the sale price of the home.

Counteroffers. Once you’ve reviewed the buyer’s offer, any changes you request are considered a counteroffer. A counter offer may be a higher price, but it may also alter other contract details like a “Removal of Sale Contingency”. A contingency removal clause states that if you receive another contingency free offer, you can take the new offer if the current buyer refuses to drop any contingencies in his offer. You may also counter with incentives (like including appliances or prepaying taxes, maintenance, etc.) instead of lowering the sale price.

The contract. The process of negotiation may take several rounds until both parties are satisfied. Remember, don’t make it a personal decision and be flexible while considering the overall terms of the deal, not just the numbers. Whether you sell you home with or without a real estate agent, it will be worth the investment to have the final contract reviewed by a real estate attorney, and some states require it.

Escrow. Once you’ve signed a contract, a neutral third party will handle the funds and documents of the transaction. This aspect of the sale (called escrow) will be handled by an attorney, title company or escrow firm. The escrow officer will make sure that all aspects of the contract are carried out appropriately.

Released contingencies. Once the sale has entered escrow, any buyer contingencies will need to be met. As each condition is met, the buyer should sign off and release the contingency. Any issues with contingency resolution (such as repairs) will need to be resolved before closing.

The finish line. At closing, your escrow officer will explain all legal documents, get each party to sign the documents and collect or disperse funds as required. Once all obligations have been met, the escrow officer will close the escrow and submit the sale for recording as required by state law. All that’s left is for you to hand over the keys and celebrate!

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