*Montana Realtor Finder is the property of Leza Vargas of Beartooth Realty licensed in the state of Montana License number RRE-BRO-LIC-71415.  Realtors are matched with agents based on questionnaires submitted to Realtors in the area and the wishes of the clients.  Realtor participation is completely voluntary.  Clients are in no way obligated to utilize the Realtor they are matched with, it is simply a tool to match approaches and communication preferences.  Montana Realtor Finder makes no claims as to the qualifications of the recommended Realtors and strongly suggests that the clients ask questions and determine expectations prior to signing with any Realtor.  Should the client choose to utilize the agent recommend for them and the match results in a closed sale either on the buying or selling side, a referral will be paid.  If you are currently working with a Realtor this website is not intended to solicit clients away from agents with existing contractual agreements. .  

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We have an offer!  Now What!

Receiving an offer is incredibly exciting but there are always some mixed emotions that come with that.  The realization that this is actually going to happen can be down right overwhelming.  Perhaps you are suddenly faced with feelings of regret that you are giving up your home. Maybe you are furious that the offer is significantly less than you were hoping for.   Don't worry, these are all normal feelings and reactions.  Your Realtor is there to help you wade through the reality of the offer and disassemble the provisions and contingencies that go along with it.

 

The offer price:

Obviously the first item of business will be what the offer is.  It's unusual in a typical market to receive a full price offer with no contingencies and no provisions so don't be concerned.  Take the time to review the offer in it's entirety before writing it off because its early in the listing term or lower than what you were hoping for.  A bird in the hand is always better than two in the bush, and many a seller has thrown away the first offer only to accept significantly less down the road.  

 

Contingencies:  

There are standard contingencies on any real estate offer.  In addition there are some that are not uncommon but maybe not something you are familiar with.  Your Realtor will help you navigate these contingencies and the timelines that accompany them. 

 

Financing Contingency

All offers are contingent on the buyer being able to obtain financing for the property or having funds available for a cash or contract deal.  If the bank decides that they are unable to finance the buyer then the contract will be terminated.  This is one example of where it is incredibly helpful to have a Realtor on the other side representing your buyer.  Realtors should stay in constant contact with all parties of the transaction, including the lender.  In addition they will often request a prequalification letter from the lender before showing the client homes, so you can be confident you are working with legitimate buyers, not just tire kickers.  In addition, you as a seller can also request a prequalification letter to ensure that you are working with qualified buyers. 

Inspection Contingency

The majority of offers also include an inspection contingency.  This allows the buyer to hire a professional home inspector to come in and inspect the home for any issues, repairs or defects that a Leyman may not notice.  The inspection will usually occur fairly quickly so that all parties can resolve any points of contention and move on.  As a seller, an inspection can be incredibly stressful.  Keep in mind it is these professionals jobs to pick your house apart and make note of everything they find.  Just because it is on the inspection report, does not mean that the buyer is going to ask for it to be replaced or repaired.  This is another area that it becomes valuable to have a Realtor representing the buyer.  It is the buyer's agent's job to review the report and come up with an agreement with the buyer on what are non-negotiable items that they expect to be repaired.  Buyers have a right to ask for repairs, but a seller also has the right to refuse them.  There have been many an overzealous buyer that has blown a real estate deal with excessive or unreasonable requests, but even a lengthy repair request doesn't mark the end of the deal.  It is up to you and your agent and the buyer and their agent to see if you can come to an agreement as to what you are willing to do and what the buyer requires to be done.  There is a set time line in the contract that will lay out the term in which this must be done.  If you come to an agreement, the contract remains in place.  If you cannot come to a resolution the contract will be terminated.  

Insurance Contingency

The insurance contingency is another standard in a real estate contract.  It gives the buyer the opportunity to call for quotes on homeowners, flood, fire or other pertinent insurance quotes and determine if they work with their budget.  This is rarely a point of contention but occasionally if you are dealing with a home with excessive claims or one that is in a high risk area, a buyer may discover that the insurance is cost prohibitive.  At this point you can renegotiate the contract or the buyer can choose to terminate. 

Title Contingency

All real estate transactions come with a title contingency.  Upon acceptance of an offer, the title company you employ will begin backgrounding your property.  They will compile a list of all liens, judgements and any other claims against the property.  This are often referred to as "clouds" on the title.  These clouds can be many things, anywhere from a claim of an easement for the power company to an astronomical tax lien from the government.  It is the title company's job to find any of these items that could hinder the sale.  When the title report is delivered to the buyer they will have a couple days to review the commitment and determine if there are any issues that need to be resolved.  It generally will not affect a sale unless the liens exceed the purchase price, in which case, the buyer could choose to renegotiate or terminate the contract

Appraisal Contingency

Any homes that are subject to financing will usually require an appraisal and virtually any loan will require that the property appraise for at least the purchase price.  The appraisal is commonly the last piece of the puzzle that everyone is waiting on before closing.  Some appraisals are more restrictive than others.  VA or example has more strict requirements for condition than say a Conventional Loan.  The appraisal is the bank's way of protecting itself against an overpriced home which would put them in a situation where there was more owed on the home than what it was worth.  The same is true for the buyer.  The appraisal gives them the confidence that the property is indeed worth what they are paying for it.  Should an appraisal come in low, that is still not the nail in the coffin for your sale.  Yet another negotiation of price can occur at this point.  You, as the seller, can drop the selling price down to the amount the home is appraising for or if the buyer is willing, they can come up with additional down payment to make up the difference (Keep in mind this is not common.  Who wants to pay more than something is worth).  There are very strict guidelines on appraisals and requesting a reconsideration or a new appraisal is rarely a solution unless the seller is willing to make substantial changes to the property to increase the value.  In some cases, the appraiser may even determine that the home is not financeable at all if there are significant structural issues, mold or other prevalent defects, although this probably would have been pointed out in the inspection period, not this late in the transaction. 

Other Contingencies

Occasionally you will encounter other contingencies.  Probably the most common would be the contingency on the sale of the buyers home.  Unless you are dealing with a first time homebuyer, odds are that your buyer has a home to sell before they can buy yours.  If your buyers doesn't yet have an offer on their property your Realtor will usually suggest that you do a 48 Hour Right of Refusal.  This essentially puts your property under contract but allows you to continue to market it to other prospective buyers.  Its a great way to have your cake and eat it too.  If another buyer comes along and makes an offer, your first buyer will have 48 hours to either terminate their contract or decide to buy the property without selling theirs first (this is not an option for most buyers, as they will require the proceeds from the sale of their home to purchase a new one)

You may encounter other contingencies as well and your Realtor will walk you through what they mean to you and the sale of your home. 

Provisions

Provisions is another area of the offer where the buyer can make certain requests.  These requests can be just about anything.  Some examples may be Closing Costs (The buyers request that the seller pay part of the expense of closing their loan),  early occupancy, or any number of other requests that are not addresses elsewhere in the contract.  Request for Closing Costs are a fairly is a fairly common practice in most markets.  Purchasing a home can be an expensive endeavor and it enables some clients to make a purchase and cover expenses where they may otherwise not be able to.   Keep in mind that it does reduce your proceeds at closing.  For example, if you accept a selling price of $250,000 on your home and the buyer requests closing costs up to $4000, it is essentially the same as accepting $246,000 for your home.  The difference is that the buyer in this scenario has more cash in hand at closing to give to the bank for expenses.  The buyer does not get to keep any of the money.