Step Five In Our Home-Buying Process: Negotiation and Contract
Your Realtor has submitted your offer to the Seller’s agent and you are awaiting their response. A common courtesy is for the Seller to respond within 24 hours after receiving your offer. Most likely you will hear sooner than that, however, unless they have received multiple offers and have requested that you submit your highest and best offer within a certain timeframe.
It is common for the Seller to respond with a counteroffer, requesting that some changes be considered by the Buyer. The most common terms that are counter-offered include price, closing date, and possession. This is not to say that the Seller will not request other changes, as there are many nuances to a contract and the necessary addenda, but these are the most common items negotiated. The Seller may also accept all of your terms upon receipt without making a counteroffer if the terms are all satisfactory to them.
Once all parties have agreed on the terms, the contract is executed – meaning the effective date is put on the contract. Our next blog “Under Contract” explains the process once the home is under contract.
- Sales price: Obviously the Seller wants to get as much as possible for their property, and you as the Buyer want to get the best price possible as well. Finding common ground and agreeing on the price is the ultimate goal.
- Closing date: Your Realtor should do his due diligence to discover what the ideal closing timeframe is for both you and the Seller. While 30-40 days is common when third-party financing is involved, a cash purchase can close in as quickly as 3-4 business days. Funding typically happens the same day as closing unless closing takes place at the end of the business day, then funding will occur in the morning of the next business day. It is wise to close sooner in the day rather than later for this reason.
- Possession: If the property you are purchasing is vacant, you will gain possession of the property once funding has occurred. If the property is occupied, it is quite possible that the Seller would prefer to have several days after closing before moving. This is most common when the Seller is purchasing another property as well. They will become the tenant as you will be the new homeowner. Negotiations will include the amount of funds (if any) that are exchanged for this leaseback period.