Congratulations you have an offer (or you are expecting to get an offer and want to be prepared.)! One of the advantages you have in working with Northwest Atlanta Properties is that we’ve been in Real Estate for over 38 years and have seen literally thousands of contracts. We know how to review them, explain them clearly to you, and to negotiate ferociously on your behalf.
We’ve written this paper to discuss and point out items that may be of interest to you. Here’s a section-by-section breakdown or what we look for when we receive an offer:
Page 1 Key Terms and Conditions
1-A. Property Identification – is the address correct?
1-B. Legal Description- legal descriptions are found in the tax records or recorded documents of your property. If the legal description is not present please look at your security or warranty deed that you received when you purchased your home to find to correct legal description. You might also go to www.gsccca.org to find this information and create a limited user account.
Purchase price – pretty self-explanatory. It’s what they are offering.
Closing Costs – this is the amount that would be credited to the buyers from your proceeds at closing. It may seem “unfair” however many costs that are normally paid (in other states) by a seller are paid for by the buyer unless accounted for here or in the special stipulations. The buyer pays for surveys, Title Insurance, and Termite Inspections unless otherwise indicated.
In most cases we recommend that you allow for the closing costs if they are asked for; if needed we can even raise the purchase price to above your asking price (providing the appraisal will be able to come in that high.) We recommend this because in most cases if they can’t get a seller to cover closings costs they can’t buy a home. Closing costs do not include the commissions owed (covered by the listing agreement and an addendum between the cooperating brokers) and the few fees the state and the closing attorney does make you pay: payoff charges, overnight fees, transfer taxes and recording fees.
Closing and Possession: Check the closing date; does this work for you? And does the possession work for you also? Once this is accepted it will take negotiation and an addendum to change them. Don’t schedule movers until due diligence is satisfied and the appraisal is ordered.
Holder of Earnest Money – this is usually the buyer’s broker or the closing attorney. The earnest money is not yours or the buyers once deposited into a bonded account.
Closing Attorney or Law Firm- We can work with anyone but prefer Ohlson and Medlock if you don’t have a preference. They do a great job and are significantly less expensive.
Earnest Money – We recommend 1% of the sales price. It is accounted for on the closing forms. If the contract falls apart the money generally goes back to the buyer but this may be negotiated or forfeited to you if the buyer defaults on the contract.
Inspection and Due Diligence – We recommend 10 to 14 days here. This is the time frame from the Binding Agreement date that the Buyer has to complete all of their due diligence – including financing and all inspections (unless there is a separate financing addendum that has a different time period). The buyers have the right to do the inspections and request either repairs or a dollar amount to satisfy their findings during this period. If for any reason, the buyer chooses to terminate the contract in this due diligence time frame they are free to do so without any penalty. We recommend that you instruct us to keep showing your home for a backup offer.
Lead-Based Paint – IF your home was built prior to 1978 and/or if you have components from a home that was built prior to 1978 in your home (like an antique mantle place or a reclaimed door) make sure there is a Lead-Based Paint Exhibit attached (checked off in Section 6 on page 6.) The fine from the EPA for not initialing and signing this exhibit could be hefty ($66,000!). If you have any questions about this, give us a call.
Brokerage Relationships in this Transaction – this just outlines who is representing who in the transaction and if you or the buyers are related in any way to any of the agents that it is disclosed.
Time limit of offer – this is the time stated that the buyer wants your response by. If you are countering be sure to fill in this section on the counter offer and allow them 24+ hours to respond.
It’s ok to initial the bottom of page 1
Purchase and Sale – a. This says that you own the home, have a warranty and that you have clear title. b. The buyer can order a survey and c. The buyer will get title insurance (mandatory if there is a mortgage and many Attorneys will NOT close without it.)
Purchase Price to be paid by Buyer: in US dollars
Closing Costs: a. States how any closing cost credit will be spent. b. Outlines some fees the buyer must pay c. Everything is prorated at closing so items you’ve paid in advance or haven’t paid for yet are accounted for.
Closing and Possession – a. This one is important – closing can be unilaterally extended for 8 days if the buyer mortgage or the title company needs an extension. b. You need to provide one set of keys to everything, any clickers etc. at closing/possession.
The holder of Earnest money – very rarely a problem but it covers what happens to the earnest money check and what happens if it bounces.
Closing Attorney/Law Firm – They represent the lender or the buyer if there is no lender. We can recommend, but the buyer ultimately picks them.
Earnest Money: a, b, c, d cover what happens if the contract falls apart. Experience has shown that if the buyer feels entitled to it then it’s often best to give it back. We can fight for it and that often is impractical, timely, and more expensive than moving on to another buyer.
Inspections and Due Diligence:
Right to Inspect Property -the buyer has the right to expect reasonable access to conduct inspections. Experience has shown that the home inspection takes 3 hours or so and you shouldn’t be in attendance. The buyers also will inspect the day of or the day before closing to make sure everything is satisfactory. It is customary that the home is clean, the carpets are clean, there is no debris inside or out, and that the yard looks nice.
Duty to Inspect Neighborhood- the buyer can also inspect the neighborhood.
Warranties Transfer: if you have a roof warranty, appliance warranty etc.- you must transfer them to the buyer at their expense.
Property to be sold “as-is” unless this agreement is subject to a due diligence period – no due diligence is very rare but even if the buyer does buy as-is you are required to disclose certain items as per this section of the contract. This also says that if there is a due diligence period the buyer may ask/negotiate an addendum and/or terminate the contract.
Repairs: This causes all sorts of problems (what exactly is good and workmanlike manner?) So many times we suggest that if there is a negotiation that we come to an agreement with a dollar amount that the buyer can use after closing to fix any agreed to items. (Like an antique mantle place)
Lead-Based Paint – this has been covered.
Brokerage Relationship in this transaction – a, b and c define the brokerage relationship, how we get paid, and limits my liability. It’s boilerplate.
Time Limit of the offer – an offer must be accepted and the other side notified that it was accepted prior to the time filled in.
Other Terms and Conditions
Generally – it’s the burden of the person giving the notice to prove delivery. Most are done by email – we keep an extensive record of all emails pertaining to your transaction and recommend you do also. Email is sent to the proper email constitutes delivery. As your broker delivery to me is equal to delivery to you.
Default: a,b and c are boilerplate saying we call all sue each other is something goes wrong.
Risk of damage to the property – you will delver to the buyer at closing the home in as good or better condition as of the date of the contract going binding. Keep your insurance until 2 days after closing. If something happens we need to disclose it to the buyers.
Other provisions – boilerplate and definitions that make things clear.
Cyber fraud – beware of cyber fraud – do not send wiring instructions unless you have verified it with the closing attorneys.
Exhibits and Addenda: If checked they become part of the contract. They would each need to be examined closely, and the most common addendums are the financing exhibits (All Cash, Conventional, FHA. And VA); the Lead-Based Paint Exhibit, Payment of Community Association Fees Exhibit, and the Sellers Property Disclosure Exhibit. The others are fairly rare to see and if they are a part of your contract we will discuss them so that you are comfortable with them.
The financing exhibits are critical to the transaction. They outline the down payment, loan amount, interest rate, and appraisal contingencies. We recommend you examine and approve each portion of this exhibit as if the home doesn’t appraise, the interest rate rises beyond what is put in the exhibit, or the buyer doesn’t qualify for the loan, then the buyer may cancel or extend the contract with no or limited penalties.
The Lead-Based Paint Exhibit only applies if your home is built prior to 1978 (or if it has components from a home built before 1978) is fairly self-explanatory but must be filled out by you. There are some brokerages that demand this be filled out even if your home was built after the deadlines.
It goes for the Sellers Property Disclosure Exhibit. In some states, it reduces your legal liability, but in Georgia (a buyer beware state) it’s for due diligence purposes only. So most agents want a copy of it before making an offer (or within a day or two after an offer being accepted.) It’s a long form and you should fill it out 100% truthfully – disclose, disclose, disclose. NTMK (not to my knowledge) is acceptable if you aren’t aware of termites, etc.
The Payment of Community Association Dues is VERY important if you belong to a homeowners association. There has been a lot of misunderstanding over the Home Owner Association Fees (HOA) and initiation fees, clear letter fees, how they are paid, and who pays them. Some associations are harder than others to get information on. We suggest you contact your HOA immediately and get all the information you can possibly get. This form clears up who pays and what is paid but must be filled out correctly.
Page 7 – Special Stipulations
Anything written here is important – and needs to understood thoroughly. If your offer has anything written here it will supersede anything printed in this offer. We will discuss these items with you one by one.
Is the signature page and should be filled out as completely as possible. The Binding Agreement Date is there to show that both sides have completed and agree to this contract. Do not sign or fill in the Binding Agreement date if you are going to counter the offer in any way. There’s another form for counters.
The COUNTER OFFER Form (F22)
Looks a lot like the first page of the offer to purchase and should be filled out as if you are making an offer to the buyer. Usually the changes made are in Part E and Part F. Make sure to put a time limit on the counter offer; this is the form that should be signed.