What happens when you receive an offer on your Twin Cities house?
When a buyer is interested in your house, the buyer's agent (or possibly a buyer that called your agent directly) will send a Purchase Agreement over as an offer on your property. We’ll review it carefully together and you should take notes on important terms and dates. We will look at the net proceeds to you, the seller, as well as the following terms and decide if it's a good offer to accept or of we should counteroffer. If any of this lingo is confusing to you, please call us or reference MN REAL ESTATE TERMS EXPLAINED.
A few main points we want you to pay particular attention to in the contract are the:
Offer price: What price did you want for your home? Do you have other offers? What is the least amount you’d be able to sell your home for? How does this compare?
Closing date: Typically in the Twin Cities, closing takes place 30-45 days after contract acceptance. Sometimes buyers will ask for a longer closing date if they are doing a special loan program, need to give their landlord longer notice if they’re renting, need to sell their house, etc. If a buyer is paying 100% cash we can usually close faster than 30 days, but 30 days is generally the required minimum if the buyer is using a mortgage to buy the property.
Earnest money: How much earnest money is the buyer putting down? The typical amount in the Twin Cities is 1%. If the buyer is putting down less than that amount, it could mean that the buyer is doing a special loan program which requires a down payment of 0% – 5% down such as a VA loan or FHA loan. Or it could mean the buyer is a bit shaky financially. Read about Earnest Money.
Down payment: Depending on the buyer’s particular loan program the down payment could anywhere from 0% up. Personally, we like to see that the buyer is putting down at least 10% (20% is ideal) unless they are doing a special loan program like a VA or FHA loan. The more they are putting down the greater the chance that their loan receives approval.
Closing cost contributions: Does the buyer want you to pay a portion of their closing costs? If so, how much? This amount will directly affect YOUR bottom line at closing. So if a buyer is offering $500,000 for your home, but wants a $10,000 closing cost contribution from you that means the offer is really only a $490,000 offer.
Home warranty: Did the buyer ask you to provide a home warranty? Depending on your home, this can cost you anywhere from $400 – $1,000 and is paid by you at the closing table and comes out of your net proceeds.
Personal property: In MN, appliances are usually advertised with the property but they are considered personal property. If the buyer asked for additional belongings, such as that great lamp in the living room or the bar stools in your kitchen, they will be completely negotiable but must be included on a separate page and not included in your contract when sent for appraisal. Read about FIXTURES that stay with the home.
Contingencies: Any contingencies the buyer has placed on the contract such as inspections, financing terms, condo review or needing to sell their own home before they can close can make a good offer price less appealing and should be carefully reviewed.
Are there any additional riders or addendum’s on the contract?
Want to review the standard MN Purchase Agreement in advance?
Click here to request a current copy of a MN Realtor Association Purchase Agreement.
We will look at the net proceeds to you, the seller, as well as the following terms and decide if it's a good offer to accept or of we should counteroffer. We will look at your position on the market and if we have other offers to consider. If you have multiple offers come in, the least desirable offers will be rejected or asked to hold as a back up offer.
If we decide to counter, realize that some negotiations move fast and others move slow. We’ve had some negotiations take two hours while others have taken weeks. It just depends on how quickly each party makes decisions, how quickly the agents relay that information, if everyone is in town and easily reachable, etc.The buyer or seller can back out at any time until the Purchase Agreement is signed by all parties and everyone has a copy. It can be nerve racking but try to be patient.
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