I Ve Got A Contract On My House Now What Do I Do
I've Got a Contract on My House - Now What do I Do?
Whether you are selling your house with an agent or "for sale by owner" you need to be prepared for what to do next when you get an offer on your house. There are 7 terms to be agreed upon between you and your buyer. It's not just about the price!
If you are are using an agent, they will guide you through the process. If you're selling your house FSBO (for sale by owner) and you got an offer, you need to fully understand the process, especially if your buyer is working without an agent. You must take the lead!
The first term that everyone focuses on is price. You can accept, reject, or make a counter offer to an offer that has been made. You should always make a counter offer. It's expected. If you said "yes" right away, the buyer would feel they offered you too much!
Agents make offers and negotiate via faxed contracts. If you are selling your own house, feel free to use fax or email to make counter offers. It's always good to have a written record rather than relying on memory of "who said what", anyway.
Before getting a sales contract signed, you and your buyer will need to agree on the following terms:
SALES PRICE
Remember to take into account real estate commissions. Since you are selling "for sale by owner", if your buyer is working with an agent you will need to pay their commission which will usually be 3%. If your buyer is not working with an agent, there will be NO commission to be paid! Under rare circumstances, if your buyer wanted your house bad enough, they might even pay their agent the commission. This usually only happens in a "hot" market.
EARNEST MONEY DEPOSIT
At the sales contract signing, a buyer needs to give you an earnest money deposit, made out to the agreed upon title company. Typically, you want to collect at least 1% of the sale price.
DOWN PAYMENT
This is the amount of money the buyer needs to come up with at closing from a source besides their loan. The minimum amount needed will be determined by the loan program the buyer is using.
CLOSING COSTS
Decide how the closing costs will be divided. Some buyers will ask for closing cost assistance. In most areas, how the closing costs are divided is customary. However, this is a point that can be negotiated.
In my state, for example, they are usually divided 50/50; however, a seller can offer to pay all the closing costs if that would make the deal go through for sure. Talk to your mortgage broker about how this would work with the particular loan program your buyer is using.
CONTINGENCIES
Contingencies let buyers cancel a contract without penalty. Of course, you want there to be as few contingencies as possible. Some typical ones include loan, inspections, appraisal, and contract contingent on buyers selling their own home.
OTHER PROPERTY
Generally, everything attached to the house stays with it. If you really want to take your fridge with you, put it in the contract.
DATE OF POSSESSION
Decide on a date that you and the buyer want to close.
When you come to an agreement on the price and all the terms, a sales contract can be signed by both you and the buyer. Any disclosures required by law will need to be signed, too. These differ by each state, but some examples are lead paint, notice of defect, and mold. You can get these online, from your agent, or from your real estate attorney. The buyer also needs to provide an earnest money deposit.
When all documents have been signed and the deposit has been presented, your house is now officially "under contract"!
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Deane Alban is an experienced real estate investor and author of "The Truth About FSBO - Complete Selling System". "The Truth About FSBO" gives homeowners a step-by-step system to sell for sale by owner the RIGHT way. Visit TruthAboutFSBO.com to receive an eye-opening free report, "Revealed: The REAL Reasons Houses Don't Sell" which will save you time, money, and frustration when selling your house.
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