Key Terms of a Real Estate Offer for a Seller
With iList Offer Negotiations, we have simplified the offer negotiation process by allowing the buyer and seller to negotiate key terms of a real estate agreement BEFORE generating a contract document. While this greatly simplifies the negotiation process, it is still important to understand the each of the terms being negotiated and what each means to you in the sale of your home. Here is an overview of the terms that will be included in your offer.
Purchase Price: Purchase price being offered for the property
Buyer Closing Cost Paid by Seller: Just as the title says, this is the amount of buyer’s closing costs that are paid at closing by the Seller. While it may sound bad, it can be advantageous for a seller to pay some of the buyer’s closing costs, either due to the loan type or other circumstance where this will allow the buyer to proceed with the purchase.
Survey Paid by: Values for this is Seller or Buyer. If the seller has an existing survey of the property, a new survey might not required by the lender or title. However, if a new survey is required, then this field specifies who will bear the cost for having a new survey done. This amount is not included in the net offer, as survey costs can vary. If you do agree to pay survey costs, this cost is often just deducted from your proceeds at closing.
Seller Paid Home Warranty: This is the amount that the seller agrees to pay to purchase a home warranty. It is common that the seller will provide a home warranty to cover the buyer in case a major appliance, such as heating or air conditioning should fail in the first year after the purchase.
Net Offer: This represents the purchase price less the Buyer Closing Costs Paid by the Seller, less the Seller Paid Home Warranty.
Close Date: This is the final execution date of the contract, and is typically when the ownership of the property will change from Seller to Buyer, along with the transfer of purchase funds. Make sure this close date coincides with your plans.
Earnest Money: A good faith security deposit the buyer puts in escrow to demonstrate that the buyer is serious and willing to complete the transaction. The earnest money can be forfeited to the seller if the buyer does not follow the terms of the contract. The amount of earnest money required is negotiable.
Down Payment: Buyers who are getting a loan are typically required to make a down payment to their lender. Some sellers will make a down payment that is larger than a lender requires. This can be an indicator that the buyer will have little problems in getting their loans approved.
Down Payment %: This field calculates what percentage of the overall purchase price the down payment represents, and will vary depending on the down payment amount.
Loan Type: Indicates the type of loan the Buyer will use to procure financing for the purchase. Different loan types can have obligations for the seller. There can also be different appraisal and inspection requirements for the different loan types, so make sure you understand the impact to the overall offer.
(opt) Inspection Amount: An option period is a period of time after contract is executed in which the buyer has the unrestricted right to terminate the contract. During this period of time, the buyer will typically have the home inspected to determine the condition of the home. The amount the buyer pays to have an option period is negotiable. The seller can reject the option period – however this is not typically done. It is also possible that the buyer does not request an option period.
(opt) Inspection Period: This is the number of days after the contract is executed in which the buyer has the unrestricted right to terminate the contract without risking the earnest money. If the buyer does terminate, the seller gets to keep the Inspection Amount above.
Well, there you have it. Once these key terms are negotiated, the contract documents are drafted using these terms and both parties proceed with executing the terms in the contract. Still have questions? No problem. With iList you have the support of an iList agent every step of the way. Just call or chat if you have any questions.