Contingency clauses.
Besides the offer price, there are other elements (addenda) of the sales contract (Purchase and Sale Agreement) that you will need to submit with your offer to purchase a home. The contract has optional criteria that you the buyer can include that protect you if certain conditions are not met. These are referred to as Contingency Clauses.
These clauses allow you an exit strategy if, for example, you are unable to secure a loan. Contingency Clauses are there to protect the buyer. The conditions of these clauses must be met before the sale can go through to closing. However, once the conditions of a contingency clause(s) have been met, then the agreement must be honored.
The most common contingency clause are:
• Financing clause or addendum means that the buyer may need to secure financing from a lender before being able to buy your property. This protects the buyer in the event that they are unable to secure a loan.
• Sale of property clause means that the buyer has to sell their own home first before they can buy the new property.
• Appraisal provision allows the buyer's lender to carry out an appraisal of the property to assess whether the property is worth the agreed to sale price.
• Inspection contingency allows the potential buyer to carry out a full inspection of the property at their own expense to determine its structural soundness.
What happens when the seller receives your offer?
Once the sellers receive your offer to purchase their Puget Sound view property in North Beach, they have three options open to them:
1. Accept your as is
2. Ignore your offer
3. Make a counteroffer
Unless you have sweetened the offer and made it irresistibly good, the seller is unlikely to accept your offer as-is.
If you come in with a low-ball offer, your offer will probably hit the shredder. Note that your Ballrad real estate agent and the seller's agent must legally submit any offers to the seller, no matter how low or likely to annoy the seller.
Assuming you the buyer, have submitted a realistic offer, the seller will want to further review your offer. The seller naturally will focus on the amount of money you are offering to pay, but the seller will also want to look at other aspects of the deal.
The seller may attempt to "qualify the buyer", particularly if they have multiple offers on the home. They may look at items such as the following:
• Are you pre-approved for a mortgage or still need to secure financing?
• What type of loan are you applying for? If it's a high risk mortgage, you might be denied by the lender.
• How much down payment and earnest money have you submitted?
• Do you need to sell your own home in a stagnant neighborhood to come up with a down payment for the property?
• The seller wants to close in a month and you are looking for two months.
Assuming the seller does not see or perceive anything of major concern, and they are still interested, they are likely to come back with a counter-offer.
Please click here for these realted items:
Counter-offers and staying sane
Home inspections
And finally..... we have mutual acceptance
Continue to Buyer's step 6. Closing and Escrow
Return to Buyer's step 4. Finding my new home
|
