CONGRATULATIONS!
YOU HAVE
AN OFFER
Along with your offer documents, we’ve included an overview of the key terms your potential purchasers have proposed. Below, you will find a guide to understanding the details of your offer.
MCKRE LISTING SPECIALISTS ON HOW TO INTERPRET YOUR OFFER
MCKRE'S EXPLANATION OF KEY TERMS IN THE OFFER TO PURCHASE & CONTRACT
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In North Carolina, once the sellers sign the contract they cannot back out. Please review the contents of this page carefully as we move forward into the negotiation phase.
YOUR OFFER, BROKEN DOWN:
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The offer to purchase and contract becomes legally binding once it’s signed by both parties, and the seller communicates to the buyer that it has been signed.
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• Due Diligence Fee: A nonrefundable fee paid directly to the seller that grants the buyer the right to terminate the contract during the due diligence period. It applies to the purchase price at closing.
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• Earnest Money Deposit: Common, but not required. This fee is paid to the seller and is an indication of a buyer’s intention and ability to buy the property. It is refundable for any reason or no reason during the due diligence period. This deposit is held by a 3rd party and applies to the purchase price at closing.
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​If the buyer breaches the contract, the EMD is payable to the seller as “liquidated damages”.
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• Due Diligence Period: During this time, the buyers can investigate the condition of the property at their own cost, perform all inspections, confirm financing, negotiate any repairs and have an appraisal. The appraiser normally works for the lender, not the buyer. The buyers may terminate the contract for any reason or no reason until the end of this period. The length of due diligence is negotiable and up to the buyer and seller to decide. At 5:00 PM on the due diligence date, the earnest money deposit is no longer refundable. The due diligence date may only be changed in writing with the agreement of both the buyers and the sellers. ​
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• Contingent Sale: If the buyer has to sell another property in order to purchase from the seller, this fact must be disclosed to the seller. The buyer’s goal should be to close on that property before the end of due diligence or he should be reasonably sure that closing will happen before the settlement date. If the buyer’s property does not close, the buyer does not have the right to terminate.
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• Settlement Date: This is the proposed closing date. Please note that in NC, either the buyers or sellers may change the settlement date up to 7 days without recourse from the other party. Delays in settlement date are common for all sorts of reasons, with loan delays the most common culprit. For this reason it’s important to remain as flexible as possible.
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• Personal Property and Items that do not Convey: Pay special attention to the top of page 4 and make certain that you are comfortable with the details. Clarity is key with personal property and any fixtures (such as lighting or mirrors) that will not convey. You covered this in your listing agreement, and we want to make sure that any exclusions are also represented here.
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• Buyer Representations: In this section the buyer discloses the steps they must take to purchase your property. First, the buyer discloses whether or not they intend to get a loan and if so, what those details might be. It’s key to remember that there are no longer traditional contingencies in the North Carolina contract; the buyer will instead plan to make sure they have their financing in place during the due diligence period while his earnest money is still refundable. Second, the buyer also indicates here whether or not they have a property that must be sold prior to making the purchase.
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• Agreement to Pay Buyer Expenses: Any monetary amount agreed to in this section would come out of your proceeds at the closing table. These closing costs can be particularly important for buyers who do not have strong cash reserves, as it is potential cash out of pocket. You might want to take that into consideration when negotiating.
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• Home Warranty: Think of this as a AAA policy… but for your home! Here, the buyer may request that you pay the premium for one year. You will have no future responsibilities related to this and the premium amount will be deducted from your proceeds at settlement.
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• Addenda: Additional documents incorporated into the buyer’s offer are referenced here.
QUESTIONS THAT SELLERS OFTEN ASK THE MCKRE TEAM:
Q: Why is my offer so much lower than my asking price?
A: Buyers often start lower than list price, sometimes substantially so. While it can be difficult to respond without emotion, we advise our sellers to remember that this is a business transaction. We will strategize with you on the best response to net your family the most money.
Q: Should I counter?
A: In a word, YES! Even though an offer may be substantially less than your asking price, we advise engaging and showing a willingness to move on price, even if it’s slight. Without responding we will likely never know how much the buyers are ultimately willing to pay.
Q: Since the buyer can walk away during due diligence, can the seller do the same?
A: Once a seller signs an offer to purchase, they are unable to terminate the contract. Should another buyer come forward, they may enter into a back up contract with the 2nd buyer.
Q: Will my property still be shown once we go under contract?
A: We are required to indicate that your home is pending in MLS within 3 days of signing your contract. Since buyers understand that you cannot walk away from the contract, the number of showings will decrease significantly.
Q: Why do you tell your sellers to “save some strength” during these contract negotiations? What is the best advice you give to a seller during the negotiating stage?
A: One of the things we advise our sellers is how much negotiations can drain them of their patience and their tolerance for further negotiation. It’s critical to remember that during the buyers’ due diligence period they will have inspections that will almost certainly result in due diligence requests. During this second round of negotiations, we always impart a caring reminder to our sellers to be prepared and calm and to have the resources to see the contract through to closing. Remember: most repair items discovered and requested during due diligence would be essential to any buyer and addressing them is therefore a necessary step to any sale.
Q: Do I have to attend closing?
A: Great question! When considering the dates for your contract, remember that you do not have to be present for closing. We can work with the closing attorney to arrange to have your documents sent to you in advance so that on the big day you can sit back, relax and wait for your check.