So this is what you’ve been waiting for, your Orlando real estate agent calls to tell you that she has an offer on your property. First, you get excited and your heart starts racing from the adrenaline racing through your body, then you get that sinking feeling thinking it may be a lowball offer. It’s kind of like a roller coaster ride where you don’t know what will come next.
At this point, it’s important to look at the whole offer in detail and not just the price. Things like contingencies, seller concessions and real property will all come into play. Even if you get your full asking price these items can cause you to net much less than you were expecting. Your Orlando real estate agent will break down the offer for you but it’s always a good idea to have a basic understanding of the contract beforehand.
Here’s an analysis of your basic real estate sales contract
The Purchase Price- This is the price of the home and what most people get excited about but, don’t get to excited until you see what the buyer is asking for as part of their offer.
The Earnest Money Deposit- An amount of money given as deposit to show that the buyer is serious about buying the property. Buyers will sometimes put down a larger deposit to show the seller that they mean business and are fully committed to buying the property. This deposit is usually held by the title company in an escrow account. This deposit will usually end up going towards the buyer’s down payment.
If for some reason the deal falls apart for reasons outlined in the contract, the buyer will then get their deposit refunded. On rare occasions the buyer may want to back out of the contract after the inspection period has passed. If this happens, the seller can make a claim to keep the earnest money deposit.
The Mortgage contingency- This will usually be the first contingency you’ll see. This is where the buyer states what their offer is based on them getting approved for a mortgage. This is very common however there are some things you should be made aware of. Make sure there is a realistic time limit in the contract. If not, the buyer can take much longer than normal trying to shop for the terms that they’ll never get anyway thus wasting your time.
Seller Concessions- Seller concessions can range from the seller paying for the buyer’s closing costs to agreeing to pay for a new AC unit. In a hot market, buyers aren’t likely to get any concessions. However, in a cooling market, buyers are likely to ask for more concessions because they will probably get most of what they’re asking for.
Inspections- This is where the buyer specifies that their offer is contingent on the home inspection report that the buyer pays for. This contingency can also include pest damages, septic tank, well issues, etc.
Personal Property-This is where the buyer can ask for some or even all of your personal property like furniture, appliances, your first born, etc. The best way to distinguish between what’s personal property and what’s real property is that everything that is physically attached to the home is real property and automatically considered part of the transaction and will belong to the new buyer.
Everything that isn’t attached like furniture, appliances and yes…your first born child would be considered personal property. So be careful of what you’re giving away!
Appraisal- This is the most common contingency in a real estate transaction. This is in place to make sure that the house is worth what the listing price is. In some cases, the appraisal will come in less than the purchase price is and lender won’t approve the loan amount.
At this point, the buyer can either ask the seller to adjust the price or, if the seller doesn’t budge, and they want it bad enough, they can come out of pocket to pay the difference. That usually doesn’t happen though.
Buyer Needs To Sell Their Home First- As a real estate agent in Orlando, I always advise my listing clients against this one. It states that the buyer’s offer is contingent on them selling their home first. If you do want to accept a contingency like this one, make sure there is a time limit, if not, a buyer can end up tying your property up for months.
In this case I like to recommend what’s know as a 72 hr clause aka “kick out clause” and here’s how it works. This clause allows the seller to continue to market their property and if another offer is received, the buyer then has 72 hrs to complete the transaction or the deal is cancelled.
With everything mentioned above, it’s easy to see why the purchase price is not a very good indicator of how much the seller walks away with at the end of the transaction.
If you’re thinking of selling you home in Orlando, Be sure to contact www.OrlandoRealtyConsultants.com and speak to one of our experienced Orlando realtors today!