A written offer or proposal is the foundation of a real estate transaction. 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 also all the terms and conditions of the purchase. For example, if the seller offered to help with $2,000 toward your closing costs, make sure that’s included in your written offer and in the final completed contract, or you won’t have grounds for collecting it later.
REALTORS ® have standard purchase agreements and will help you put together a written, legally binding offer that reflects the price as well as terms and conditions that are right for you. Your REALTOR ® will guide you through the offer, counteroffer, negotiating and closing processes. In many states certain disclosure laws must be complied with by the seller, and the REALTOR® will ensure that this takes place.
If you are not working with a real estate agent, 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 is usually presented to the seller by your real estate agent, by the seller’s real estate agent, if that’s a different agent, or often by the two together. In a few areas, sales contracts are drawn up by the parties’ lawyers.
What is in an Offer?
The purchase offer you submit, 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). So it’s important that the purchase offer contains all the items that will serve as a “blueprint for the final sale.” The purchase offer includes items such as:
- address and the legal description of the property
- sale price
- terms: for example, all cash or subject to you obtaining a mortgage for a given amount
- seller’s promise to provide clear title (ownership)
- target date for closing (the actual sale)
- amount of earnest money deposit accompanying the offer, whether it’s a check, cash or promissory note, and how it’s to be returned to you if the offer is rejected – or kept as damages if you later back out for no good reason
- method by which real estate taxes, rents, fuel, water bills and utilities payments are to be adjusted (prorated) between buyer and seller
- provisions about who will pay for title insurance, survey, termite inspections, etc.
- type of deed to be given
- other requirements specific to your state, which might include a chance for an attorney to review the contract, disclosure of specific environmental hazards or other state-specific clauses
- a provision that the buyer may make a last-minute walkthrough inspection of the property just before the closing
- a time limit (preferably short) after which the offer will expire
- contingencies, which are an extremely important matter and that are discussed in detail below
Contingencies – “Subject to” Clauses
If your offer says “this offer is contingent upon (or subject to) a certain event,” you’re saying that you will only go through with the purchase if that event occurs. Here 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: for example, “within 10 days after acceptance of the offer.” The seller must wait 10 days to see if the inspector submits a report that satisfies the buyer. If not, the contract would become void. Again, make sure that all the details are explicitly stated in the written contract.
You’re in a strong bargaining position, that is, you look particularly welcome to a seller, if:
- you’re an all-cash buyer
- you’re already have a preapproved mortgage and you don’t have a present house that has to be sold before you can afford to buy
- you’re able to close and take possession at a time that is especially convenient for the seller
In these circumstances, you may be able to negotiate some discount from the listed price.
On the other hand, in a “hot” seller’s market, if the perfect house comes on the market, you may want to offer the list price (or more) to beat out other early offers.
It’s very helpful to find out why the house is being sold and whether the seller is under pressure. Keep the following considerations in mind:
- every month a vacant house remains unsold represents considerable extra expense for the seller
- if the sellers are divorcing, they may want to sell quickly
- estate sales often yield a bargain in return for a prompt deal
This is a deposit that you give when making an offer on a house. A seller is understandably suspicious of a written offer that is not accompanied by a cash deposit to show “good faith.” A real estate agent or an attorney usually holds the deposit, the amount of which varies from community to community. This will become part of your down payment.
Buyers: the Seller’s Response to Your offer
You will have a binding contract if the seller, upon receiving your written offer, signs an acceptance just as it stands, unconditionally. The offer becomes a firm contract as soon as you are notified of acceptance. If the offer is rejected, that’s that – the sellers could not later change their minds and hold you to it.
If the seller likes everything except the sale price, or the proposed closing date, or the basement pool table you want left with the property, you may receive a written counteroffer including the changes the seller prefers. You are then free to accept it, reject it or even make your 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, reject or counter again. The document becomes a binding contract only when one party finally signs an unconditional acceptance of the other side’s proposal.
Buyers: Withdrawing an Offer
Can you 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 you haven’t yet been notified of acceptance. If you do want to revoke your offer, be sure to do so only after consulting a lawyer who is experienced in real estate matters. You don’t want to lose your earnest money deposit or find yourself being sued for damages the seller may have suffered by relying on your actions.
Sellers: 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 the same time, 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.
Once you have a specific proposal before you, calculating net proceeds becomes simple. From the proposed purchase price you can subtract 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 and other utility 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. In that case, remember that you will receive a refund of money left in that account, which will add to your proceeds.
When you receive a purchase offer from a would-be buyer, remember that unless you accept it exactly as it stands, unconditionally, the buyer is 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, negotiate with the buyer any agreement you want about who pays for the following costs:
- termite inspection
- buyer’s closing costs
- points paid to the buyer’s lender
- buyer’s broker fees
- 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-timer buyers – are short of cash. Helping them may be the best way to get your home sold.
Your REALTOR ®’s marketing efforts and considerations will include advertising, showing the property, how long the house has been on the market and whether you’re buying another home. Your home should be listed, whenever possible, through a Multiple Listing Service (MLS).
ADVERTISING AND PROMOTION
Properties are commonly advertised through real estate agent Web sites, Internet home search/listing services, classified advertising and real estate guides. Promotion efforts through office and MLS tours are a good way of getting other buyer agents to view your home and to promote it to the buyers they are working with.
Even with all these advertising avenues, ” For Sale” signs on front lawns are still remarkably effective. Many REALTORS ® promote their Web sites on the sign and use brochure boxes with the signs to market the property. When appropriate, and with your permission, your REALTOR ® may send a mailing about your property to neighbors. Sometimes one of them has a friend or relative who always wanted to live near them. You never know how far reaching the benefits of word-of-mouth advertising by friends, relatives and neighbors can be.
SHOWINGS AND OPEN HOUSES
To prepare your home for viewing, make it as bright, clean, cheerful and serene as possible. Always look at your home from the buyer’s point of view. Your REALTOR ® will probably find a tactful way to suggest that you be absent while the house is being shown to prospective buyers, because your presence will inhibit their actions and conversations. They won’t feel free to open closets and cabinets, test out the plumbing and discuss their observations objectively as they walk through the house. It goes without saying that your children and pets should not be on the premises either.
If your REALTOR ® has scheduled an open house, you may want to notify the neighbours, and assure them that they’ll be welcome. They’ll jump at the chance to poke around in your house, and sometimes they can turn up a buyer among their friends.
QUICK TIPS FOR SHOWINGS AND OPEN HOUSES:
- Clean or replace dirty or worn carpets.
- Open all curtains and blinds.
- Replace any burned out light bulbs and turn on all lights.
- Clear all clutter.
- Clear all countertops.
- Wash and put away any dirty dishes.
- Set the dining room or kitchen table if you have particularly nice linen or china.
- Simmer a few drops of vanilla on the stove.
- Put on soft music.
- Burn wood in the fireplace on cold days, otherwise, clean the fireplace.
- Put fresh towels in the bathroom.
- Take any laundry out of the washer and dryer.
- Leave the house so your REALTOR ® is free to deal with prospective buyers in a professional manner.
- Put pets in cages or take them to a neighbor.
HOW LONG HAS YOUR HOUSE BEEN ON THE MARKET?
Professional appraisers sum up their entire body of knowledge in three words: “Buyers make value.” Your home is worth as much as a buyer will pay for it.
If your home has been on the market for months, it’s a clear message that the property may not be worth what you’re asking for it. This is particularly true if there haven’t been many prospects coming to see it. What you do at that point depends on whether you really need to sell, and whether you’re working with a time limit.
If you’re not really motivated to move soon, you can always wait – years if necessary – and hope inflation will catch up with the price you want. The problem is that in that time, your home begins to feel shopworn. Buyers become suspicious of a house that’s been for sale for a long time.
If you really do need to sell, with your REALTOR ® discuss a schedule for gradually dropping your price until you find a level that attracts buyers. There’s no point in saying, ” We simply can’t sell our house.” Anything will sell if the price is right.
IF YOU’RE BUYING ANOTHER HOME
You may wonder what will happen when you’re selling one home and buying another – how will all the details work out? This is a common situation and REALTORS ®, lawyers, and title and escrow companies have plenty of experience in arranging contracts and loans so that the two transactions dovetail smoothly.
And should you sell your home first then buy or buy first then sell? Ideally, it’s beBuyersst to find a home you like and make an offer subject to selling your current home. This generally works in a normal market. However, in a “hot” market most sellers will not accept a “subject to sale” offer. In this case you need to sell your home first and then buy a new home in the interim period between selling and vacating your house.
If you find that you need to buy the next house before you’ve received the proceeds from the present one, lending institutions can sometimes make you a short-term ” bridge” loan to tide you over between the two transactions. Make sure you fully understand the exposure and emotional investment before proceeding with this type of loan.
How do I prepare my house to put on the Real Estate market?
A house that “sparkles” on the surface will sell faster than its shabby neighbour, even though both are structurally well maintained.
From experience, REALTORS® also know that a “well-polished” house appeals to more buyers and will sell faster and for a higher price. Additionally, buyers feel more comfortable purchasing a well-cared for home because if what they can see is well maintained, they assume that what they can’t see has probably also been well maintained. In readying your house for sale, consider:
- How much should you spend to prepare your house for sale?
- Exterior and curb appeal
- Interior appeal
Before putting your house on the market, take as much time as necessary (and as little money as possible) to maximize its exterior and interior appeal.
HOW MUCH SHOULD YOU SPEND TO PREPARE YOUR HOUSE FOR SALE?
In preparing your home for the market, spend as little money as possible. Buyers will be impressed by a brand new roof, but they aren’t likely to give you enough extra money to pay for it. There is a big difference between making minor and inexpensive polishes and touch-ups to your house, such as putting new knobs on cabinets and a fresh coat of neutral paint in the living room, and doing extensive and costly renovations, like installing a new kitchen.
Your REALTOR® is familiar with buyers’ expectations in your neighbourhood and can advise you specifically on what improvements need to be made and which improvements are most effective. Don’t hesitate to ask for advice.
MAXIMIZING EXTERIOR AND CURB APPEAL
When preparing to put your home up for sale, your first concern is the home’s exterior. If the outside, or “curb appeal” looks good, people will more than likely want to see what’s on the inside.
Here are some tips to enhance your home’s exterior and curb appeal to buyers:
- Keep the lawn edged, cut and watered.
- Regularly trim hedges and weed lawns and flowerbeds.
- Be sure your front door area has a “Welcome” feeling.
- Paint the front door.
- In spring and summer, add a couple of pots of showy annuals near your front entrance.
- In snowy areas, keep walks neatly cleared of snow and ice.
- Check foundation, steps, walkways, walls and patios for cracks and deterioration, and fix any problem areas.
- Remove and repaint any peeling paint on doors and windows.
- Clean and align gutters.
- Inspect and clean the chimney.
- Repair and replace loose or damaged roof shingles.
- Repair and repaint loose siding and caulking.
- Reseal old asphalt.
- Keep the garage door closed.
- Store RVs and old cars elsewhere while the house is on the market.
MAXIMIZING INTERIOR APPEAL
You want your home to look as spacious, bright and clean as possible. Also the home should look neutral – without a lot of your personal and sentimental objects – so buyers can begin to imagine living there.
Here are some tips to enhance your home’s interior appeal to buyers:
- Give every room in the house a thorough cleaning and remove all clutter. This alone will make your house appear bigger and brighter. Some homeowners with crowded rooms actually rent storage garages and move half their furniture out, creating a sleeker, more spacious look.
- Use a professional cleaning service every few weeks while the house is on the market.
- Remove the less frequently used, and even daily-used items from kitchen counters, closets, basement and attic to make these areas more inviting.
- Make sure that table tops, dressers and closets are free of clutter.
- Pay special attention to the kitchen and bathrooms: they should look as modern, bright and fresh as possible. It is essential for them to be clean and odor free.
- Repair dripping faucets and showerheads.
- Buy showy new towels for the bathroom, and put them out only for showings.
- Spruce up a kitchen in need of more major remodelling by installing new curtains and cabinet knobs, or applying a fresh coat of neutral paint.
- Clean walls and doors of smudges and scuff marks.
- If necessary, repaint dingy, soiled or strongly-coloured walls with a neutral shade of paint, such as off-white or beige. The same neutral scheme can be applied to carpets and linoleum.
- Check for cracks, leaks and signs of dampness in the attic and basement, and fix any problem areas.
- Seal basement walls if there are any signs of dampness or leakage.
- Repair cracks, holes or damage to plaster, wallboard, wallpaper, paint and tiles.
- Replace broken or cracked windowpanes, mouldings and other woodwork.
- Inspect and repair the plumbing, heating, cooling and alarm systems.
Setting the list price for your home involves evaluating various market conditions and financial factors. During this phase of the house selling process, your REALTOR ® will help you set your list price based on:
- Pricing considerations
- Comparable sales
- Market conditions
- Offering incentives
- Estimated net proceeds
Pricing Considerations – Find a Balance Between Too High and Too Low
When setting a list price for your home, you should be aware of a buyer’s frame of mind. Consider the following pricing factors:
If you set the price too high, your house won’t be picked for viewing, even though it may be much nicer than other homes on the street. You may have told your REALTOR ® to “Bring me any offer. Frankly, I’d take less.” But compared to other houses for sale, your home simply looks too expensive to be considered.
If you price too low, you’ll short-change yourself. Your house will sell promptly, yes, but you may make less on the sale than if you had set a higher price and waited for a buyer who was willing to pay it.
TIP: Never say “asking” price, which implies you don’t expect to get it.
PRICE AGAINST COMPARABLE SALES IN YOUR NEIGHBOURHOOD
No matter how attractive and polished your house, buyers will be comparing its price with everything else on the market.
Your best guide is a record of what the buying public has been willing to pay in the past few months for property in your neighborhood. Your REALTOR ® can furnish data on sales figures for those comparable sales and analyze them to help you come up with a suggested listing price. The decision about how much to ask, though, is always yours.
Competitive Market Analysis (CMA): The list of comparable sales a REALTOR ® brings to you, along with data about other houses in your neighborhood that are presently on the market, is used for a “Comparative Market Analysis” (CMA). To help in estimating a possible sales price for your house, the analysis will also include data on nearby houses that failed to sell in the past few months, along with their list prices.
A CMA differs from a formal appraisal in several ways. One major difference is that an appraisal will be based only on past sales. Also, an appraisal is done for a fee while the CMA is provided by your REALTOR ® and may include properties currently listed for sale and those currently pending sale. For the average home sale, a CMA probably gives enough information to help you set a proper price.
Formal Written Appraisal: A formal written appraisal (which may cost a few hundred dollars) can be useful if you have unique property, if there hasn’t been much activity in your area recently, if co-owners disagree about price or if there is any other circumstance that makes it difficult to put a value on your home.
TIP: If you do order a market value appraisal, make it clear you don’t need an elaborate, or full narrative report, i.e., the kind that’s complete with photos of the house and neighborhood. Floor plans and a site map is sufficient in most cases.
MARKET CONDITIONS – IS IT A BUYER’S MARKET OR A SELLER’S MARKET?
A CMA often includes a Days on the Market (DOM) value for each comparable house sold. When real estate is booming and prices are rising, houses may sell in a few days. Conversely, when the market slows down, average DOM can run into many months.
Your REALTOR ® can tell you whether your area is currently in a buyer’s market or a seller’s market. In a seller’s market, you can price a bit beyond what you really expect, just to see what the reaction will be. In a buyer’s market, if you really need to sell promptly, offer an attractive bargain price.
IF YOU PRICE HIGH, SET A SCHEDULE FOR LOWERING THE PRICE
Some sellers list at the rock-bottom price they’d really take, because they hate bargaining. Others add on thousands to the estimated market value “just to see what happens.” If you want to try that, and if you have the luxury of enough time to feel out the market, sit down with your REALTOR ® and work out an advance schedule for lowering the price if need be.
If there haven’t been many prospects viewing your home after three weeks, you may need to lower your list price. If that doesn’t bring any prospective buyers, you may need to lower your list price again. Plan on doing that regularly until you find a level that attracts buyers. Make a written schedule in advance, before emotion takes over and you’re tempted to dig your heels in.
OFFERING INCENTIVES TO HASTEN A SALE
Sometimes cash incentives are as effective as lowering the price, especially in the lower price range where buyers may be “cash poor.” You may offer to pay some or all of a buyer’s closing costs and discount points required by the buyer’s lending institution.
If you haven’t had much traffic through your house and you’re in a hurry to sell, you may want to add the offer of a bonus to the selling broker, in addition to their commission. An example of the wording for such an offer may be “to the broker who brings a successful offer before Christmas.”
ESTIMATING NET PROCEEDS
Once you have been given an estimate of market value by your REALTOR ®, you can get a rough idea of how much cash you might walk away with when the sale is completed. This can be particularly useful when you start looking for another home to buy.
To estimate your net proceeds, from the estimated sales amount, subtract the applicable costs in the three sections outlined below: seller’s costs, buyer’s/seller’s costs and closing costs.
Seller’s Costs: Subtract the following costs as applicable.
- Payoff figure on your present loan(s)
- Broker’s commission
- Prepayment penalty on your mortgage
- Attorney’s fees
- Unpaid property taxes
Buyer’s/Seller’s Costs: Additionally, your REALTOR ® can tell you whether local customs or rules dictate whether the buyer or seller pays for the items listed below. Subtract the following costs, as applicable.
- Title insurance premium
- Transfer taxes
- Survey fees
- Inspections and repairs for termites, etc.
- Recording fees
- Homeowner Association transfer fees and document preparation
- Home protection plan
- Natural hazard disclosure report
Closing Costs: As far as closing costs are concerned, you and your eventual buyer may agree on any arrangement that suits you, no matter what local practice dictates. Your REALTOR ® will assist you in estimating what your final closing costs will be.
Do you have any additional questions about pricing your real estate? Our team of full time REALTORS will be happy to answer your questions, or drop by and provide you with a personal home evaluation. Contact us today at email@example.com or 604 936 1111.
Getting ready for the big moving day? Here is a quick reference to make sure all your needs are covered.
Obtain a Change of Address Notifications Cards from your local Post Office. Send cards to
- Banks, insurance companies, and other financial institutions
- Charge card and credit card companies
- Doctors, dentists, and other service providers
- Federal, Provincial and Municipal authorities and any other government agencies as needed
- Gather moving supplies, boxes, tape, rope.
- If moving far away, make any necessary travel arrangements
- Call a moving company or make truck rental reservation to move yourself
- Place medical and insurance records in a safe and accessible place
Two Weeks Before Moving
- Inform gas, electric, water, cable, local telephone and trash removal services of your move. Sign up for services at your new address.
- Inform long distance phone company of your move. Sign up for long distance service at your new address
- Recruit moving-day help
- Confirm travel reservation, if moving far
- Arrange to close or transfer your bank account, if appropriate
The Day Before Moving
- Set aside moving materials like a tape measure, pocket knife, packing boxes, tape and markers
- Pick up rental truck, if you have rented or borrowed
- Check oil and gas in the rental truck and your car
- If traveling, make sure you have tickets, charge cards, and other essentials
- Boxes, all sizes
- Bubble wrap or other cushioning material
- Marking pens
- Tape measure
- Furniture pads or old blankets
- Packing tape and scissors
- Money and credit cards
- Label each box with the room in the new home to which it should be delivered.
- Number the boxes and keep a list of what is in each box.
- Clearly mark fragile items.
- Pack a bag of personal items you’ll need during the move (change of clothes, toiletries, medicine, maps, food, and drinks). Keep it in an easy-to-find place when you pack.
- Keep a medical kit accessible.
- If you have children, pack a bag of games and activities for the trip
During the First Week After Moving
- Locate police and fire stations as well as hospitals and gas stations near your home.
- Scout your new neighbourhood for shopping areas. You may need furniture, tools, or house wares unexpectedly.
- Call your local Municipal authority to find out which day the trash is collected. Also ask whether your new community has recycling programs.
- Seek out new service providers such as a bank, cleaners, veterinarian.
- If you have moved into a different province, contact the Motor Vehicles Department to get your new driver’s license.
- Call your Chamber of Commerce for helpful information on: Schools, Cable service, Cultural events and community activities, Libraries and parks, and Availability of emergency calling services, such as 911
- Provide your new doctor and dentist with your medical history. You may need to request your file from your previous doctor/dentist.
- Transfer insurance policies to an agent in your new community.
- You may also wish to make a detailed list of your belongings, their value, and your coverage.
- Give your new home a good cleaning.
Team Léo is affiliated with several moving and cleaning companies. If you buy or sell real estate with Team Léo, check in with us! We will refer you to several quality, reputable companies (and discounts may be involved)! We are a full service real estate team, and this includes moving day.
Why should I use a REALTOR to sell my home?
A real estate agent can help you understand everything you need to know about the home selling process.
Not all real estate licensees are the same. Only members of the NATIONAL ASSOCIATION OF REALTORS® (NAR) are properly called REALTORS ®. They proudly display the REALTOR “®” trademark on business cards and other literature. REALTORS ® are:
- committed to treat all parties to a transaction honestly.
- subscribed to a strict Code of Ethics and are expected to maintain a higher level of knowledge of the process of buying and selling real estate.
An independent survey reported that 84% of home buyers would use the same REALTOR ® again!
Real estate transactions are one of the biggest financial dealings of an average lifetime. Transactions today usually exceed $500,000!
- If you had a $500,000 income tax problem, would you attempt to deal with it without the help of a certified professional accountant?
- If you had a $500,000 legal question, would you deal with it without the help of an attorney?
Considering the small upside cost and the large downside risk, it would be wise to work with a professional REALTOR ® when you are selling a home.
If you’re still not convinced of the value of a REALTOR ®, here are more reasons to use one. Your REALTOR ® can:
- Provide up-to-date information on what is happening in the marketplace. This includes the price, financing, terms and condition of competing properties. These are key factors in getting your property sold at the best price, quickly and with minimum hassle.
- Recommend repairs or cosmetic work that will significantly enhance the salability of your property.
- Market your property to other real estate agents and the public. 82% of real estate sales are the result of personal agent contacts through previous clients, referrals, friends, and family. Your REALTOR® is the marketing coordinator, sharing your property with other agents through a Multiple Listing Service (MLS) and other cooperative networks. When a property is marketed with the help of your REALTOR®, you do not have to allow strangers into your home.
- Objectively evaluate every buyer’s proposal without compromising your marketing position. This initial agreement is only the beginning of a process including appraisals, inspections and financing. Can you count the number of possible pitfalls? Your REALTOR® can help you write a legally binding, win-win agreement that is most likely to make it through the process.
- Help close the sale of your home. Issues may arise between the initial sales agreement and closing (also called settlement or escrow). For example, unexpected repairs may be required to obtain financing. A title problem could be discovered. Alone, the required paperwork can be overwhelming for most sellers. Your REALTOR® is the best person to objectively help you resolve these issues and move the transaction to closing.
Have more questions? Please contact us at firstname.lastname@example.org or 604 936 1111!