RULES TO FOLLOW FOR OFFERS & COUNTEROFFERS

So far, your game plan has worked to perfection! You have just been notified that an offer has been made on your home. What do you do now? Follow these rules.

The Offer Must In Writing. In some states, a verbal offer is legal but it is unenforceable because you can’t prove the offer was made if the buyers decide to change their minds before getting it in writing. Your REALTOR® should have explained that to you when your home was listed. So don’t even consider verbal offers.

Time Is Of The Essence. The buyer will specify a date and time by which they want an answer concerning their offer. Usually, it is called the "Time For Acceptance" clause. You must accept, reject, or make a counter-offer by the time specified in that clause. If not, the buyer may void the contract, withdraw the offer, and demand the earnest money deposit be returned to them. If you cannot give them an answer within that time frame, ask your REALTOR® to negotiate more time for you. When both parties have accepted a new time, both parties must initial the change.

The Earnest Money Deposit, or good faith money as it is sometimes called, is intended to demonstrate to the seller the buyers’ earnest intention to abide by the contract if a meeting of the minds can be achieved. There is no set amount that must be provided by the buyer. If the buyer is willing to put down $5,000, it is unlikely that they would develop a serious enough case of Buyer’s Remorse to walk away from that much money. Some buyers will only want to put down a small amount of $1,000 to $1,500. On a lower priced home, that may not be an unreasonable amount to accept. But on a much more expensive home, that amount would be unacceptable.

Usually, the REALTOR® will want to get as much as 5% to 10% earnest money deposit. Sometimes, even though the buyer may be willing to put that much down as earnest money, they may need a few days to gather the funds from various accounts. Not many people will have that much in a checking account. So the initial amount and the amount promised within a specified number of days should be annotated on the contract.

Factors Other Than Price Must Be Considered. While the selling price will be important to you, the terms will be equally important. If the buyer wants occupancy within two weeks, can you move that fast? Even if you can, do you want to be rushed like that? Probably not! If you have your home listed as being sold furnished and the buyer does not want the furniture, are you willing to consider such an offer? How much less are you willing to accept without the furniture being included? Is the buyer demanding that upgrades or home improvements be made that are excessive? Even so, are you willing to do them to close the deal?

Counteroffers. It is rare when any offer you receive will be exactly what you want. What do you do if the offer isn’t what you exactly want? You make a counteroffer. You begin to negotiate the differences with the buyer through the REALTORs® involved. However, keep in mind that anytime you make a counteroffer, the buyers can reject it and demand their earnest money deposit be returned to them so they may invest in another home. So, if you get an offer that is very close to what you are willing to accept, discuss it in detail with your agent. Circumstances may be such that it would be greatly in your favor at this time to accept less than what you wanted. It will allow you to do something of even greater benefit to you rather than waiting for the perfect offer that may never come.

Contingency Offers. It would be nice if all offers were for cash with no strings attached. That rarely happens. The sale and closing of your home will allow you to invest in another home and that closing will have the same effect on the home in which that homeowner is investing, and so on.

That is called the Domino Affect. So, when you make your offer on the home in your new location, you will want to place a "Kick-Out" contingency on the contract that protects you if something happens to the closing on your current home. When you apply for your mortgage, ensure that you notify the lender that you want to be qualified for your loan using the proceeds from the sale of your home to buy the new home. That way, you won’t end up owning two homes, which you may not be able to afford. The buyers of your home will probably make a similar offer.

Most offers are contingent upon the closing of the buyers’ home prior to closing on your home. They don’t want to own two homes either. However, if the buyers who make an offer on your home haven’t even put their home on the market for sale yet - that is an entirely different situation to consider.

Right-Of-First-Refusal. One tactic to use is the 48 hour or 72 hour "Right-Of-First-Refusal" addendum. That allows you to keep your home listed in the Multiple Listing Service as active but with a contingency contract on it. If another offer is made that is acceptable to you, without regard to the offering price or terms, then your agent will notify the selling agent for the original contract that another acceptable offer has been received. That means that the clock has begun ticking and the buyer with the right of first refusal has either 48 or 72 hours to either lift the contingency and agree to close within a specified time frame or to allow the new offer to take affect. In either case, both parties must initial the changes.