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Negotiating the Offer

They Make an Offer to Buy Your Home
Review how best to negotiate the offer - and any potential contingencies - so that you can maximize the sales price of your home.


Page Topics:

  1. legal obligations
  2. legal disclosure forms
  3. real estate contract
  4. before accepting the offer
  5. about contract negotiations
  6. view the home inspection kit as reference

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Legal Obligations

You will likely need the services of a real estate lawyer or closing agent to protect your transfer interests.

In most real estate markets within the United States, a Title Company can handle every aspect of a real estate transaction

However, you might want the services of a lawyer to protect your interests and to act as your escrow agent. This person will represent you in the sale and transfer of your home to the buyer

Your attorney can also help with closing and secure all closing documents and commitments:
Step6: see closing information


Your family, friends, or agent may suggest a representative.

Or you may turn to representative you used previously to purchase your home. You can also use these reference sites for recommendations:

Download Legal Documents:

Search your local yellow pages:
attorneys for real estate


Understanding your Legal Rights and Obligations:

You have the right to sell your home without the use of a real estate agent or other third party.

You can price your home at any level.

You can change your mind about selling it. You can also change the price at any time.


You can show your house to anyone you choose.

You can likewise refuse to show your house to anyone who doesn't meet your guidelines; e.g., someone who doesn't have the financial capacity to afford your home.

Please note: you cannot however refuse to show your house based on race, color, religion, sex, national origin, or disability.

In other words, you cannot discriminate. This also appli


You can sell your home to whomever you please.

You can likewise refuse to sell your home to someone who for example, may disturb the peaceful setting of the neighborhood with a bunch of dogs.

But note that you cannot discriminate based on race, color, religion, sex, national origin, or disability.

For more information about fair housing laws:


Understanding Your Obligations:

Once you enter into a sales contract, you are obligated to fulfill the terms of the contract.

Your home must be in working condition on settlement date. You must inform the buyer about the condition of your house.

Personal items that belong to the Seller must be removed from the house and property prior to possession. The house should be thoroughly cleaned.

Items that are "attached" to the home and other agreed upon items stated in the contract must be turned over upon closing.

You will pay any related commission fees if other third-parties were involved in the sale of your home.

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Legal Disclosure Forms

In most states, you will be required to complete and deliver three highly important disclosure forms:

1. Seller Disclosure of Property Condition:

This form mandates the seller to state the condition of the house; and in agreement with the buyer, acknowledge that the conditions prevent the buyer from suing the seller later on for repair or replacement.

You must state the overall condition of the house such as:

  • basement / foundation
  • plumbing / septic tanks / sewer systems / etc.
  • electrical systems
  • roof
  • heating and cooling
  • groundwater contamination
  • and any dangerous substances in the home such as asbestos and radon gases

You must also state the overall condition of appliances and components that will remain in the house such as:

  • kitchen ranges / ovens / microwaves
  • dishwashers
  • refrigerators
  • alarm systems
  • pool heaters
  • sump pumps
  • fireplaces / chimneys

You will note the overall condition as being good, fair, or poor. If you don't know the overall condition of a certain item, mark it "unknown".

This alerts the buyer to have the "unknown condition" inspected.  


2. Lead-Based Paint Disclosure Form

If your home was built prior to 1978, you must furnish the buyer any information or reports related to lead-based paint in the home.

The buyer can then make an inspection or assessment on how related paint can be removed.

For more information about lead paint:


3. Termite

In most states, you must furnish reports that your home is free of termites.

Termite Control Information:
controlling termites and carpenter ants
protecting your home from termites
do-it-yourself termite control



If you fail to notify correctly or to falsify any of the reporting above, the buyer may return after the sale and recover damages.

Be honest in all reporting. If you don't know the overall condition of the particular item, simply state "unknown". This will obligate the buyer to make a thorough inspection.

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Real Estate Contract

Listed are some of the key variables that you will find in a typical real estate contract:

Asking Price:

This is your selling price for the home. You can ask for any price. The price figure is generally derived by a number of factors.

Step2: See pricing your home under our FSBO plan

Buyers expect that all sellers generally price their home over the amount that is the true expected selling price. In a tight seller's market, you may likely get your starting asking price. In a buyer's market, buyers will be prepared to negotiate this price down.

The contract allows for an offering price by the buyer.


The Terms of the Sale:

The contract generally lists the items that become terms of the sale. These items include personal property and fixtures that are remain with the house such as ceiling fans, window treatments, outdoor lighting fixtures, and other attached items.

Buyers may list other items that they would like to remain with the house. These items may include window draperies, shower curtains, wall ornaments, and other items that are reasonable and appropriate.

You do not have to agree to these terms and you may strike them out of the contract. But these items may become negotiating points when finalizing the sales price.

The terms of the sale may include a buyer's request that the seller pay a portion of the closing costs. Again, this will depend on your market. If home prices are firm, you can refuse any sharing of closing costs. Some sellers do however agree to pay a portion of closing costs if the asking price remains the same.

(This could be a tax benefit to some sellers if they can deduct closing costs. Step1: See our home selling numbers ).

Request to view the estimate of the buyer's closing costs before agreeing to any portion of the closing costs. If the buyer's closing estimate is high, you may want to negotiate paying a portion or reducing your price to keep the buyer in the contract.

Step6: See discussion on closing costs


Financing Terms:

The contract is usually contingent upon the buyer obtaining within X-days a written loan commitment from a lender.

The contract usually states that the buyer will make a loan application within a few days from the effective date of the contract, and that the buyer will use all diligence to obtain this loan at a reasonable interest rate and terms as defined in the contract. If the financing doesn't come through, then the contract is no longer binding.

Many sellers give preference to contracts whose buyer has been pre-qualified for a mortgage. Pre-qualification does not guarantee financing, but it does show that lenders are willing to extend financing under certain conditions.


Earnest Money:

Earnest money is a cash deposit made by the buyer "as a security" when they enter into a contract with the seller. This cash deposit will be paid to the seller in the event the buyer fails to honor the contract

The deposit will be set aside as payment, or returned to the buyer if the seller doesn't accept the contract terms. If both buyer and seller agree to the contract terms, and then the buyer breaches the contract, the earnest money is paid to the seller as compensation for potential losses the seller may have incurred.

Earnest money is not required in most states. But you should require it in your contract negotiations. Consider the deposit as insurance in the event the buyer breaches the contract.

The amount of your earnest money may vary. Most experts recommend a deposit anywhere from 3-5% of the total purchase price. Make sure you request a deposit high enough to keep the buyer in good faith.


Settlement and Possession:

The contract will list settlement and possession dates and terms.

Settlement date
is when you close on the contract and both parties fulfill the contract terms. Settlement date is usually 45-60 days after you sign the initial contract, but that may vary depending on how fast both parties want to move.

The possession date
is when buyer takes possession of the home. The possession date and settlement date are usually the same day unless otherwise noted.

Occupancy date
is the date when the buyer can move into the home. Some contract terms may allow the seller to stay in the home after possession date. For example, the seller may request more time to move out of the house.

Usually the seller will pay the buyer some rental fees for the seller's time in the home after possession date. Check with your closing attorney on possession and occupancy terms and agreements.


Pro-ration and Sale of Current Residence:

All real estate taxes for the current year, homeowner or condominium fees and maintenance fees, and rents, if any, will be prorated at the closing date. These annual expenses will be divided between the seller and buyer.

If the contract is conditioned on the buyer selling their current residence, this provision will be included in the contract. The terms of the agreement must be clearly stated so the buyer and seller understands what constitutes the sale of the current residence. Discuss these terms with your agent or closing attorney.


Home Inspection:

The contract should include provisions for structural inspections. Most contracts allow for a provision that gives the buyer the right to withdraw from the contract if the inspection report is not satisfactory.

You must deliver the plumbing, heating, electrical (including light fixtures and ceiling fans), air conditioning, fireplace, all built-in appliances, and if one exists, swimming pool in working condition. The roof must be free of visible leaks at the time of closing.

Structural repairs required to satisfy an inspection are limited to set dollar amount agreed to by the seller and buyer. This means that the seller will make repairs up to an agreed limit. This protects you from skyrocketing repairs to satisfy a buyer's wish.


Environmental, Termite and Other Tests:

Other tests that may be included in the contract are environmental and termite inspections. You will want to test for radon, lead paints, and asbestos if you believe these tests may be necessary, particularly in older homes.

Home Services: search local inspectors for environmental tests

The home must also be free from active termite or other wood destroying insects. You must furnish a letter or report from a reliable licensed termite control operator stating that the home is termite free.

Termite Control Information:
controlling termites and carpenter ants
protecting your home from termites
do it yourself termite control

Find pest control contractors:
search our pre-screen pest control contractors


Contingencies Clauses:

The contract should contain buyer contingencies clauses that allow the buyer to withdraw from the contract if certain events do not occur. Some of the most common contingencies include:

  • contingency that the buyer is able to obtain adequate financing to purchase the home from a lending institution

  • contingency that a full inspection be performed and that the inspection report satisfies the buyer

  • contingency that the buyer receive the job offer that allows them to buy the home

Review all contingencies carefully to understand how the contract may become void if certain conditions are not met.

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Before Accepting the Offer

Make sure the contract includes only the essentials:

The contract should include the following items (this may vary by state). Make sure you clarify what remains with the house:

  • attached lighting, heating, cooling, plumbing fixtures, and equipment
  • all doors, storm doors, and windows
  • all window treatments and hardware, ceiling fans
  • wall-to-wall carpet
  • all built-in kitchen appliances and range
  • pool equipment and accessories, if any
  • all bathroom fixtures and mirrors
  • garage door opener and all remote controls
  • satellite dishes, rotors, and control devices
  • all landscaping and related lighting, mailbox and basketball goal and backboard, if any
  • all security system components
  • other components listed by the buyer and agreed to by the the seller


Review the Buyer's request for additional items:

The buyer will likely add items to the contract that they will want to remain with the house. Make sure you understand the financial impact and whether you can negotiate price for some of these items:

  • window draperies
  • shower curtains
  • wall ornaments
  • yard decorations
  • home appliances
  • home furniture
  • building sheds
  • shelving
  • other

If you don't agree to the terms, simply strike them out of the contract. Or you may be willing to negotiate these items as part of the sale.


Including a Home Warranty Provision:

The buyer may request that a home warranty be included in the sales contract. A home warranty protects the buyer against costly repairs for one full year after the sale. The warranty usually covers the plumbing, electrical, built-in appliances, heating and air conditioning units.

Sellers are not obligated to offer a home warranty. But it may be worth the price considering your negotiating stance.

List of home warranty companies to consider:

American Home Shield:
Home Warranty of America:

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About Contract Negotiations

Presentation and Counter Offer:

You (or your agent) will write up the contract that states price, earnest money requirement, and other terms.

You will present this to the buyer (or the buyer's agent)

Expect the buyer to review every line item before they sign. Once the contract leaves their hand and is presented back to the seller, they are legally bound by its terms if you accept the contract without any changes.

Buyers will likely stipulate how long you have to respond to their offer. Most terms allow for 48 hours. This prevents sellers from shopping better terms.


Your response to the buyer's offer may be one of the following:

  1. You may accept the buyer's offer as is. The contract then becomes binding on both parties.
  2. You may reject the buyer's offer. Any rejection of even the slightest provision makes the contract non-binding.
  3. You may change the terms of the contract and counter-offer the original contract. It will then go back to the buyer as a new document, changes to the original document, or added pages to the original contract. The buyer can accept your counteroffer or walk away from the deal entirely and receive their earnest money back.
  4. The buyer has the right to counter the seller's counteroffer. They will simply change the terms of the seller's counteroffer as advised by their agent.

    The contract will come back to you as a counter-counteroffer and the process may repeat itself over again. The negotiation can go on forever with counter-offers to the counter-offers. But most offers are reached on the 2nd or 3rd round.


In a seller's market, it is common for the seller to receive several offers.

Working with several offers allows you to keep your price and terms tight. You may not need to counter a buyer's offer. If they are unwilling to accept your original terms, simply reject their offer and move to another offer.


In a buyer's market, it is common for the buyer to counter with generous terms,

such as a lower asking price or a portion of the closing costs paid. You may need to do some creative negotiations to keep the buyer from walking away from the contract.

Creative negotiations may include:

keep the asking price firm, but pay a larger portion of the closing costs;
lower the asking price, but pay a smaller portion of the closing costs
keep the asking price firm, but include home improvement allowances
keep the asking price firm, but agree to home improvement request



Once both parties agree to the terms and sale price stated in the contract, the terms of the contract are binding on both parties.

If the buyer change their mind for any reason and breach the terms of the contract, the seller has the right to declare the contract null and void and retain any earnest money. The buyer may also be liable for any other financial damage suffered by the seller and the seller's agent.

If you fail for any reason to complete the sale of your home according to the terms stated in the contract, the earnest money will be returned to the buyer and the seller may be liable for any financial damage.

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What is the Home Worth?

get a home valuation report for:

  1. making an offer
  2. negotiating the offer
  3. appraising the neighborhood
  4. for peace of mind
  5. just to know
view your report

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