We received an offer. What does it mean?
Fantastic! We’ve gotten our first offer. We’ll review it carefully together. A few main points I want you to pay particular attention to in the contract are the:
- Offer price: What price did you want for your home? What is the least amount you’d be willing to sell your home for? Does this price get you to your next step?
- Closing date: Typically we see closings take place 30-45 days after contract acceptance. They can be much quicker in a cash transaction, depending on which company updates the abstract. Sometimes buyers will ask for a longer closing date if they are doing a special loan program or they need to sell their house, etc.
- Earnest money: How much earnest money is the buyer putting down? There is no required or even customary amount. We typical see 0.5%–1%. If the buyer is putting down less than that amount, it could mean that the buyer is doing a special loan program that requires a down payment of 0%–3.5% down such as a VA loan or FHA loan. Or it could just mean the buyer simply doesn’t have a lot of extra cash to put aside. I don’t want you to be hung up on getting a high earnest money amount. There are too many instances in the Oklahoma purchase contract where the buyer is returned their earnest money until after the inspections and appraisal are completed. I’m more interested in a lender’s pre-qualification letter and the integrity of the agent representing the buyer.
- Downpayment: Depending on the buyer’s loan, the downpayment could be anywhere from 0% up. Personally, I like to see at least 10% unless they are doing VA or FHA financing. The more they are putting down, the greater the chance their loan receives approval. We see many successful FHA and 100% USDA Rural Development loans though, so let’s evaluate your offer on its own merit.
- Closing cost credits: Does the buyer want you to pay a portion of their closing costs? If so, how much? It’s important to note the amount they are asking for comes off your net proceeds. So if a buyer is offering $150,000 for your home, but wants a $6,000 closing cost credit, that means the offer is really $144,000. (←That’s important to keep in mind when you’re the buyer on the other end.)
- Home warranty: Did the buyer ask you to provide a home warranty? Depending on your home, this can cost you anywhere from $450–$800 and is paid by you at the closing from your net proceeds.
- Personal property: Did the buyer ask for any of your personal property to be included in the contract such as that great lamp in the living room or the bar stools in your kitchen? You do NOT have to include these items if you wanted to take them with you to your next home. Also if they’re financing the purchase, any personal property must not be a part of the purchase contract but a separate bill of sale.
- Contingencies: Are there any contingencies the buyer has in the contract such as selling their home before they can close? There are some winning strategies we need to talk about if this is the case!
- Are there any additional riders or addenda on the contract?
Want to review the contract in advance?
Click here to read the Oklahoma Uniform Contract of Sale of Real Estate. That document assumes a cash purchase. An appropriate financing supplement may be attached.
Once an offer is received, we’ll discuss all of the above, and then you can decide whether you want to accept their offer, counter their offer or walk away from their offer. If we decide to counter, realize that some negotiations move fast and others move slow. It just depends on how quickly each party makes decisions or if there are decision makers in different places, how quickly the Realtors relay that information, if everyone is in town and easily reachable, etc. We give an expiration date for the answer but also need to be patient in certain circumstances.
Also, I recommend you read the Oklahoma Contract Information Booklet. Not recommended after a glass of wine, at bedtime or while operating heavy machinery 😉
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