Thursday, February 28, 2019 / by Matt Bergman
This is part of the contract where most sellers will want to focus on. It makes sense this is where they can see how much money they will get. But it also a point in the contact where the sellers can get blinded by the bells and whistles the purchase price. They see it and they automatically think about all the stuff they are going to use the money for. Something a seller should be looking at is how much earnest money the buyer is putting down. Earnest money is the buyer putting skin in the game, and every contract will have some amount. A good starting point for the amount of earnest money a seller should expect would be 1% of the purchase price. If for some reason the buyer breaks the contract without any written contingency in it they loss that money. So a buyer who puts more earnest money down they will have more reason to stay in the contract. Most contracts will have a Financing contingency in it. This means if the buyer can't get financing for any reason they will get all of their earnest money back and be able to get out of the contract. The seller should find out as much financial information about the buyer as they can. Make sure that they can afford the house. Because if they have the financing contingency the buyer will get all the money back. Then seller will have to put their home back one the market and when you do that you typically get less for your house the first time.
Almost every buyer will have this be apart of the contract. Typically this contingency is a shorter time frame and is in the beginning part of the contract. They will have an inspector come and look over the entire house. They will check everything from the roof to the foundation. After the inspection they will send a detailed report to the buyer. If the buyer for any reason wants to get out of the contract then they can, as long its within the time frame of the inspection contingency. If the buyer still wants the house but wants the seller to pay for some fixes it goes back to negotiation. The buyer can ask for any fixes and if the seller doesn't want to fix it the contract could fall through and the buyer get all the earnest money back. This contingency is one that most contracts will have in it but its important for the seller to know what could happen.
Every contract is different and comes with its unique challenges, but its critical for the seller to pay attention to whats in the contract to help vet any buyers who might walk at a moments notice. So to sell your house for the most pay attention to whats in the contract.