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One of the most significant factors home buyers and sellers focus on when buying real estate is the negotiated sales price in the purchase contract. While the sales price is undeniably important, the reality is that other terms in the sales contract may have more far-reaching and significant effects on the transaction.
In fact, with a closer look at some of the most important terms, you will see why you and your agent should actively negotiate for improved terms rather than a lower sales price.
Some buyers and sellers will haggle over a few thousand dollars in the sales price without paying attention to the closing costs, but the fact is that the closing costs for a typical transaction may cost the buyer between two to five percent of the sales price on average.
A sales contract may be negotiated so that the seller assumes some or most of the closing costs, and this can result in considerable savings the buyer. Likewise, when a contract is negotiated in the interest of the seller, the seller may save thousands of dollars at closing if the contract states that the buyer is responsible for these costs.
In an ideal world, a home would appraise for the contracted sales price, but this is not always the case. A sales contract may be written with terms that allow for the sales price to be renegotiated after the appraised value is confirmed, and this may benefit both parties. Some sales contracts, however, state that the negotiated sales price is final regardless of the appraised value.
Many home buyers opt to obtain a property inspection to determine if there are hidden issues with the property structure, foundation, roof, air quality, and other components. Some inspections reveal that a home is in fairly good condition, but others may reveal that a property needs thousands or even tens of thousands of dollars’ worth of repairs.
Some sales contracts may be written so that the buyer may back out of a contract within a certain period of time after receiving the property inspection report or so that the terms of the sales contract may be renegotiated once the property inspection report has been completed.
A real estate transaction may extend for several weeks or even months while the buyer contracts with a lender, an appraiser, a property inspector, and other third parties. During this period of time, many events can occur that may adjust the interest level or even the ability of the buyer and seller to fulfill the contract.
Some sales contracts are written so that the buyer may opt-out of the contract within a certain period of time with minimal expense and regardless of other factors related to the appraisal and inspection.
Generally, there are standard terms found in many real estate sales contracts, but these terms can be adjusted by either party to benefit buyers or sellers. Those who are preparing to buy or sell property should actively communicate their needs and desires with their real estate agent so that the contract may be negotiated with terms most favorable to their needs.
If you are ready to apply for a mortgage or are simply looking to find out more about them, we can help. Sammamish Mortgage is a local, family-owned company based in Bellevue, Washington. We have been providing a variety of mortgage programs to borrowers all across Washington, Oregon, Idaho and Colorado since 1992. Please contact us if you have mortgage-related questions.
Whether you’re buying a home or ready to refinance, our professionals can help.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.