Updated: Oct 21, 2018
Once we get an offer in, we will call / text and email you with the details. The offer will be attached to the email, and you will receive an email that looks something like this:
We have received an Offer to Purchase on your home. Details of the offer are below, and a copy of the offer documents are attached for your review.
Current List Price: $450,000
Purchase Price: $452,000
Due Diligence Fee: $400
Earnest Money Deposit: $2,000
Due Diligence Period: December 20, 2018
Settlement/Closing Date: December 31, 2018
Personal Property: All appliances
Seller Paid Closing Costs: $0
No Home Warranty to be provided by seller.
This is the period requested by the buyers to perform inspections and get their loan firmly in place. During this period, they can choose to leave the contract for any reason. The vast majority of our sellers use our CPO program, and therefore will likely have few issues come up at this stage. Two common derailments to a contract that come up in the due diligence period:
1. The Inspection report comes back with items that need repair (which they do the majority of the time).
Inspectors report an average of 25+ items that need repair on most inspections, although these are often 'small' items.
Four most common scenarios here:
1. It can scare buyers away,
2. Cause the buyers to request the sellers to fix all of the items with a licensed contractor,
3. Cause the buyers to request a credit to fix the items themselves, effectively reducing the net proceeds to the seller by whatever amount the buyers request. A common amount requested we see is $2,500, although this can vary dramatically depending on the repairs.
4. Buyers agree to take the home 'as is'.
2. The second derailment we see is the home not appraising,
The appraisal may be conducted by the buyers (if paying cash) or the bank, if the buyers are getting a loan.
If our sellers have used the CPO program, very few issues are likely to arise from either the inspection or the appraisal, as we have conducted these 'upfront'.
Due Diligence Fee
This is the amount paid by the buyer directly to the seller (through delivery by the agent), which the seller keeps no matter what happens going forward. If the deal closes, the buyers will have the amount credited back to them at closing. We look at this as buyers 'putting skin in the game'.
A common amount to see is 1% of the listing price. It is not mandatory. It is used as a negotiating tool. Depending on market conditions, it may be $0.
Earnest Money Deposit
This is a check from the buyers payable to the closing attorney, who deposits into his/her trust account. If the buyers choose to walk away from the deal during the due diligence period, they get the earnest money back. If they walk away after the due diligence date, then the seller usually gets to keep it. If the deal closes, the money goes towards the buyers closing.
A common amount to see is 1 - 2% of the purchase price. It is not mandatory, and depending on market conditions, it may be $0.
Seller Paid Closing Costs
Sometimes buyers ask the seller to pay a set amount towards the buyer's closing costs.
There may be addenda attached to the main Offer To Purchase Contract. For example, an FHA addendum may have a stipulation that the buyers are not obligated to complete the purchase or incur any penalty (such as earnest money) should the property not appraise. This is not generally an issue for sellers using our CPO program, as you have already had an appraisal. This usually (no guarantee, however experience has held out) means that your home will appraise.
Once you get this email, review the details carefully with your agent. Most buyers are expecting a 'counter offer'.
Should you have multiple offers on your home, it's generally advisable to contact each agent representing the buyers and ask them for their 'highest and best' offer by a set time - usually 24 hours from the request. That way you get to choose the highest offer. We do not advise using this approach should an offer come in first that delights you!
Any questions? Email or call us at AllstarPowerhouse: 828 333 4483