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KEY ELEMENTS OF A CONTRACT
Price and terms
If you receive what you consider an insultingly low offer,
don't give in to an emotional response. Be realistic, objective
and, above all, cool. Examine the offer. Was the price based
on an independent appraisal or a broker's market analysis?
How long has your property been on the market? How many written
offers have you received? What kind of market are you in --
buyer's or seller's?
Don't use price alone as a reason not to counter
or negotiate. A first offer may reveal what's most important
-- price or terms -- to this particular buyer and thus give
you the key you need to begin the bargaining.
Condition of home and inspection
It is fair that the purchaser should have the opportunity
to have your home inspected for soundness of construction
and state of repair. Keep the process fair by insisting that
the person or firm to be used is named in the contract by
professional designation, and set a time limit for the removal
of the contingency -- five to seven working days.
As a rule, contract language determines what
must be in working order at settlement. Make sure everything
is clearly spelled out; otherwise, local law and custom may
prevail.
Financing
If the contract is contingent on a buyer's ability to obtain
an acceptable loan, does the clause spell out what actions are
required by the buyer? What interest rate and number of discount
points does the buyer consider "acceptable"? Is there
a time limit? What will happen if no loan is secured by the
agreed-on deadline? How will you know when the buyer gets a
loan commitment? How can the contingency be removed? Generally,
you'll want to leave the buyer as few escape hatches as possible.
Response deadline
You'll be asked to respond to a contract offer within a specified
period of time -- say, one or two days. Try to get as long
a response time as possible. If you are presented with a desirable
contract containing a deadline you are unable to meet -- perhaps
because your attorney or spouse is out of town -- counter
promptly with a more suitable time frame -- and an explanation.
If you think you'll have other offers coming
in, you'll want to buy as much time as possible to review
them and perhaps use one offer to jack up another.
Sale of buyer's home
Should you cooperate with a prospective purchaser who must
sell a home before buying yours? Maybe. But when you accept
a contract offer contingent on the sale of the buyer's house,
you are linking the sale of a property you know -- yours --
to the sale of one you don't know -- his. You'll be taking
your house off the market until the buyer's house is sold
and closed. If things go awry, you could end up weeks later
just where you started -- hanging up a "for sale"
sign.
Nevertheless, if you believe accepting an
offer contingent on the sale of the buyer's home is the best
you can hope for under the circumstances, seek the advice
of a broker familiar with the market in the area of your potential
buyer's home. Assure yourself that the property is salable
and reasonably priced. Get marketing plans set out in the
contract. For example, it should be clear what the owner proposes
to do if the home doesn't sell after one month, after two,
and so on.
Consider asking for an up-front nonrefundable
option (in lieu of an earnest-money deposit), which you will
retain if the deal fails to close within a specified time.
Have the contingency sale clause reviewed by your attorney.
Better still, have your attorney write it.
Settlement date and occupancy
If you're selling your home because you already have another
house under contract, seek a settlement date that will enable
you to take your sales proceeds to the next closing. Be realistic;
the buyer of your home will probably need at least 30 to 50
days to arrange financing and come to closing.
Most sold homes are delivered to the buyer
empty and clean on settlement day. If you need a temporary
place to live after settlement, resist the path of least resistance.
Our best advice: If at all possible, avoid staying in your
old home even one night after closing. And don't accept the
new owner's offer -- no matter how friendly -- to accommodate
you with a short-term lease.
Other conditions
Other contingencies address problems or events that may happen
between the time the contract is signed and the time title
is passed to the buyer. If your house burns down or a natural
disaster strikes, what happens? Does the buyer have to buy
and pay the agreed-on price? Can the whole deal be called
off? Can a lower price be offered? What about insurance proceeds?
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