By Colleen C. Wilcox, Broker, CNS, CDPE – Hinsdale, IL.
What are the five questions sellers should ask before signing a contract with a potential buyer?
1. What evidence has been provided that the buyer is financially capable of closing the deal?
In the current market, approximately 10 percent of real estate deals fall through between the time of initially signing the contract and the transaction closing. The primary reason a deal falls through is due to the financing. Your realtor can call the buyer’s lender and talk to lender to find out how financially capable the buyers are and if they have the capacity to close.
2. Have I chosen an attorney that specializes in real estate?
Many people think that if they have a family member or friend who is an attorney that the person could just manage their home sale transaction because it’s a cheaper and easy option. However, in the current real estate climate where the deals are often times very complex, the legal aspect of the transaction is not as simple as in the past. In order to ensure that the transaction is handled correctly, you really need to hire an attorney that specializes in real estate law.
3. Do I really understand the risks of accepting contingencies?
There are a variety of contingencies that could come into play in a real estate transaction. The riskiest one is accepting an offer that is contingent upon the potential buyer’s selling their home. This scenario is not a solid contract, but more of an “if then, maybe” situation. If you find yourself in this situation, it’s important to look at the house that the buyer is trying to sell to see if it’s priced right and whether other homes in their area are selling quickly. Another frequent contingency is when a buyer’s home has sold, but hasn’t closed which is less risky than the former. Finally, the most common contingency is the finance contingency where the buyers are contingent upon getting a mortgage. Determine with your family which contingencies you’re prepared to accept before placing your house on the market.
4. Have the items I want to exclude been written into the contract?
Take a tour through your home before you draft up a contract and make note of all of the items that you want to take with you including any items screwed into the wall or ceiling. Be sure to write these items as exclusions in your contract. Or take cherished items down before you even put your house on the market. If you wait until the attorney review period to negotiate exclusions it can sometimes be too late.
5. Do I know where I am going and have a plan to be out by the closing date?
While this question is pretty straight forward – it’s one that many people find themselves in if their home sells quicker than they anticipated. With the current real estate market, many well priced homes are receiving multiple offers with very eager buyers. You need to be prepared to close and move out of your home in as little as 45 days. Have a plan in place and start thinking well in advance of signing a contract about what an accelerated time-frame means for you and your family.