How to Deal with Offers

You got an offer – Congratulations! So…what now? Read on to learn what to do when you receive an offer to buy your home.

An offer should be submitted in writing as a sales contract, which is a binding legal agreement. Never conduct verbal negotiations – even casually – with an interested buyer, and don’t discuss your asking price. Instead, ask for an offer in writing.

When you receive an offer, your first step should be making sure your buyer can get a sufficient mortgage for their offer price. Considering an offer from someone who can’t afford your home is a waste of time. Ask your buyer to get pre-approved by a lending institution or pre-qualified online.

Once financing is no longer a concern, review the offer, paying close attention to any special clauses or handwritten additions. Buyers often try to negotiate non-standard demands – perhaps that the purchase of your home be contingent upon the sale of their own – or request that you pay certain fees – like mortgage costs or closing fees. While sellers usually do pay many of the closing costs, you can try to negotiate a maximum amount you’re willing to spend. 

There are several ways in which you can handle an offer. Of course, you can accept it and sign the sales contract, or you can reject it outright. You can also make a counteroffer, crossing out unacceptable terms and writing in new terms you’d like included.  If you make modifications, be aware that all changes to the sales contract must be approved in writing by all parties, or the contract will be invalid. Even tiny changes like moving the closing date is enough to nullify a contract.

When you’re ready to accept an offer, do so quickly, since a buyer can withdraw at any time until closing. At the time you accept, the buyer should write you a check, usually for at least $500, for earnest money (also called a binders fee). The check will be held by a third party like your lawyer or the buyer’s real estate agent, and if the buyer defaults on the contract, this money is yours to keep.

Once you sign an offer, you’re still allowed to accept a backup offer. Simply make sure that it is clear to the second buyer that your house is under contract, and the backup is valid only if the first offer falls through.