Evaluating a California residential purchase agreement can seem daunting, but there are really just a few key things you need to take a look at to determine how to respond. Read on to learn what those things are and review your offers with confidence!You should focus on the following when you receive an offer:
Remember, on average, home sellers believe their home is worth 8% more than it actually is - so keep that in mind as you evaluate the price.
- Close of escrow date:
It should be 30 to 45 days out for an offer with financing and 3 to 10 days for a cash offer.
- Earnest money deposit:
2-3% of the purchase price is the norm.
- Strength of the buyer:
All other things being equal, you would prefer the following in the following order:
- A cash offer
- A conventional loan with 20% or more down payment
- A conventional loan with 10% or more down payment
- A conventional loan
- An FHA loan
- A VA loan
- Short or no contingencies:
Standard contingencies include appraisal, financing and inspection, and the lengths typically run 17 to 21 days. The shorter, the better, for you as the seller.
- Standard cost allocations:
Who typically pays what costs varies from city to city. Check with us before you accept the cost allocations in any offer.
- Your vendors:
It is customary for the seller to select escrow, title, termite company, etc. The offer should read "seller's choice." Sometimes buyer agents try to take advantage of sellers who do not know otherwise.
It's typically a mistake to accept the vendors of the buyer agent because they will tend to favor the buyer in the event of a dispute. This can be even worse if the vendor is affiliated with the real estate brokerage, which you often don't know until after the offer is signed and you get an affiliated disclosure form from them.
If you don't already have an escrow/title company you like, we can recommend a few that we regularly work with. They are all outstanding and have 5 star Yelp reviews.
- No gimmies:
Is the buyer asking you for things you want to keep, such as your flat screen television or outdoor furniture? And if so, are you willing to include those as part of your home sale?
Once you've reviewed these items and decided how you feel about each, you can either agree to the buyer's terms or can submit a counteroffer to re-negotiate anything you don't agree with. Have questions? Ask us!