You have received an offer on your home. Now what? Is it a good offer? Is your buyer approved for a mortgage? What type of mortgage is your potential buyer obtaining? What inspections is the buyer asking to have done and what are your obligations financial and otherwise if an inspection were to come back in any way unsatisfactory? These are all important questions and they can make a big difference to you, the home seller.
The first thing you will want to look at other than the price is the financing for the potential buyer. There are three main types of loans. The first is Conventional. This is generally the best buyer for your home for several reasons. First, they have good credit and are putting some money down. Second, the costs are less to you, the seller because there aren’t additional fees you have to pay for the buyer. The next type is an FHA Loan. An FHA loan is a loan which is insured by the Federal Housing Administration. This type of loan allows a buyer to have lower credit scores, a higher debt ratio and put as little as 3.5% of their own money into the home purchase. A home seller is allowed to pay up to 6% of the buyer’s closing costs. An FHA appraiser may be slightly pickier than a Conventional appraiser about things like railings, gutters, etc. A VA Loan is a government guaranteed loan used by qualifying Veterans. This is the only loan of the three where the buyer can truly not have to put a down payment into the transaction and the seller is allowed to pay 100% of the buyers closing costs. There are a few smaller fees which the seller must also pay on behalf of the buyer. A VA appraiser may also be slightly pickier. Above all when you are looking at a potential buyers financing make sure you really look at the lender letter and that it says credit has been pulled and assets and employment have been reviewed. Make sure it also states the loan type and the amount of the down payment. These things will all show you the strength of your buyer. Your real estate agent will be able to guide you in this process.
Next you will want to review the rest of the real estate contract to make sure you understand what inspections the buyer is asking to have performed. These will generally have a specific dollar amount you as the seller would be responsible to cover in the event any repairs are necessary. You wouldn’t believe how often this is not thoroughly explained to the seller and it can make a huge difference in your bottom line. For example did you know that if termites or termite damage is found you as the seller have agreed in a preprinted paragraph of the Maryland Real Estate Contract to pay up to 2% of the sales price to have this treated or repairs made? Here on the Eastern Shore of Maryland a huge percentage of the homes are on well and septic and if either of these tests fail in any way the seller is responsible to make repairs up to whatever amount the buyers have written in the contract. The bottom line is that you need to read the contract and have it explained to you to avoid any unwanted financial surprises.
Lastly, it is important to respond to the buyer in a timely manner. Take the time you need to review the real estate contract, but make sure to get back to the buyer with a contract acceptance or counter offer as quickly as you can. There are few people more excited or nervous than a buyer who has submitted an offer on your home!