The Offer
When a buyer decides to make an offer on your house, they will do so on a standard form that will include specific terms and conditions regarding the buyer's offer. If you accept the offer, by signing it, this becomes a legally binding contract that defines the terms of the house purchase. Some of the terms and conditions that get incorporated into an offer include:
- Proposed purchase price
- A deposit by the buyer, to secure the offer
- A list of items they want included in the purchase (such as appliances)
- Inspection Contingency
- Financing Contingency
- Title Contingency
The buyer's deposit is usually a relatively small amount of money that is paid simply to secure the offer. It is intended to show that the buyer has good intent to proceed if the offer is accepted. This way if the buyer later does not follow through in good faith, they forfeit their deposit. Note that the money forfeited is often kept by the buyer's realtor, not the seller. Nonetheless, if does serve to insure that the buyer it acting in good faith.
The offer will also provide the buyer with the right to have a professional home inspector come and perform a detailed inspection of your house. The purpose of this inspection is to protect the buyer in case there are hidden problems with your house that they did not discover during their visits to the house. The home inspector will look over your house in detail and find all the little things that may be wrong with it.
Once the inspection is done, it is not uncommon for the buyer to come back and ask the seller to repair some of the problems found in the inspection. This saves them the hassle of dealing with it after they own the house. In addition, sometimes the inspection finds a major problem that you will not be able to repair before the closing. If this happens, the buyer will have the right to terminate the deal, or to offer you a lower price so that they can use the money they save on the house purchase to fix the problem themselves after buying the house from you. Bear in mind that regardless of what an inspection may found, you do have a right to fix the problems found. So the buyer is legally bound to give you that chance before being able to terminate.
The offer also specifies a timeframe in which the buyer must apply for financing, and how long they have to obtain it. This is the other major way in which a house sale may fall through. If the buyer is not able to get financing, the offer agreement will automaticlly terminate.
In addition, the offer will also be contingent on a title search. This is a review to insure that you do indeed have clear title to your house. Problems that can come up in a title search include finding out that you did not pay some taxes in the past and some government agency has attached a lien to your house, or finding out that the title inspection performed on your behalf when you bought your house was done poorly (meaning that you never really bought the house from the previous seller). This latter problem is quite rare, but it does happen to some very unfortunate people.
Usually the whole process goes very smoothly from your acceptance of the offer to the closing of the sale. Its important that you understand the basic contingencies that you will find in the offer, but the main terms at this stage of the game to worry about are the proposed purchase price and the list of items they want included.
