Oral promises are not legally enforceable when it comes to the sale of real estate. Therefore, you need to enter into a written contract, which starts with your written proposal. This proposal not only specifies price, but all the terms and conditions of the purchase. For example, if the buyers said they would like help with $2,000 toward their closing costs, be sure that’s included in their written offer and in the final completed contract, or you will have problems at the closing.
We use standard forms provided by the Oklahoma Real Estate Commission. These forms offer protection for both the seller and the buyer and are standardized to take into account Oklahoma laws and statues.
If you are not working with a REALTOR®, keep in mind that you must draw up a purchase offer or contract that conforms to state and local laws and that incorporates all of the key items. State laws vary, and certain provisions may be required in your area.
After the offer is drawn up and signed, it will usually be presented by the buyer’s agent to me, which I will then present to you.
What the offer contains
The purchase offer the buyer submits, if accepted as it stands, will become a binding sales contract (known in some areas as a purchase agreement, earnest money agreement or deposit receipt). It’s important, therefore, that it contains all the items that will serve as a “blueprint for the final sale.” These purchase offer items include such things as:
- Address and a legal description of the property
- Offer price
- Terms — for example, all cash or subject to buyer obtaining a mortgage for a given amount
- Seller’s promise to provide clear title (ownership)
- Target date for closing
- Amount of earnest money deposit accompanying the offer, and whether it’s a check, cash or promissory note, and how it’s to be returned if the offer is rejected
- Method by which real estate taxes, rents, fuel, water bills and utilities are to be adjusted (prorated) between buyer and seller
- Provisions about who will pay for title insurance, survey, termite inspections and the like
- Type of deed to be given
- Other requirements specific to Oklahoma
- A provision that the buyer may make a last-minute walk-through inspection of the property just before the closing
- A time limit after which the offer will expire
- Contingencies, which are an extremely important matter and discussed in detail below
If the offer says “this offer is contingent upon (or subject to) a certain event,” the seller is saying that they will only go through with the purchase if that event occurs. The following are two common contingencies contained in a purchase offer:
- The buyer obtaining specific financing from a lending institution. If the loan can’t be found, the buyer won’t be bound by the contract.
- A satisfactory report by a home inspector “within 10 days (for example) after acceptance of the offer.” The seller must wait 10 days to see if the inspector submits a report that satisfies you. If not, the contract would become void.
Again, make sure that all the details are nailed down in the written contract.
You’re in a strong bargaining position if:
- Your home is in good condition
- Your mortgage is up-to-date
- Your home is in a desirable location
- Your home has a fairly standard floorplan for your neighborhood
- Your home is not the highest priced home in your neighborhood
This is a deposit that the buyer gives when making an offer on a house. The money is usually deposited in a broker’s account and protected by Oklahoma law.
Accepting the Offer
You will have a binding contract you sign an acceptance just as it stands, unconditionally. The offer becomes a firm contract as soon as you the buyer is notified of acceptance. If the offer is rejected, that’s normally the end of negotiations.
If you like everything except the sale price, or the proposed closing date, or the basement pool table the buyer wants left with the property, you may submit a written counteroffer, with the changes you prefer. The buyer is then free to accept or reject it or to even make their own counteroffer. For example, “We accept the counteroffer with the higher price, except that we still insist on having the pool table.”
Each time either party makes any change in the terms, the other side is free to accept or reject it, or counter again. The document becomes a binding contract only when one party finally signs an unconditional acceptance of the other side’s proposal.
When you receive a purchase offer from a would-be buyer, remember that unless you accept it exactly as it stands, unconditionally, the buyer will be free to walk away. Any change you make in a counteroffer puts you at risk of losing that chance to sell. Who pays for what items is often determined by local custom. You can, however, arrive at any agreement you and the buyers want about who pays for:
- Termite inspection
- Buyer’s closing costs
- Points to the buyer’s lender
- Buyer’s broker
- Repairs required by the lender
- Home Protection Policy
You may feel some of these costs are none of your business, but many buyers — particularly first-timers — are short of cash. Helping them may be the best way to get your home sold.
Withdrawing an offer
Can the buyer take back an offer? In most cases the answer is yes, right up until the moment it is accepted, or even in some cases, if the buyer hasn’t yet been notified of acceptance.
Calculating your net proceeds
When an offer comes in, you can accept it exactly as it stands, refuse it (seldom a useful response), or make a counteroffer to the buyers with the changes you want. In evaluating a purchase offer, you should estimate the amount of cash you’ll walk away with when the transaction is complete. For example, when you’re presented with two offers at once, you may discover you’re better off accepting the one with the lower sale price if the other asks you to pay points to the buyer’s lending institution. I will provide you with a “net sheet” giving you a close estimate on the amount of money you will net for the sale. It will include the following costs:
- Payoff amount on present mortgage;
- Any other liens (equity loan, judgments);
- Broker’s commission;
- Legal costs of selling (attorney, escrow agent);
- Transfer taxes;
- Unpaid property taxes and water bills;
- If required by the contract: cost of survey, termite inspection, buyer’s closing costs, repairs, etc.
- Your present mortgage lender may maintain an escrow account into which you deposit money to be used for property tax bills and homeowner’s insurance premiums. In that case, remember that you will receive a refund of money left in that account, which will add to your proceeds.