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Note to Sellers: Not All Offers Are Created Equal

Capital Region home sellers this post is for you. The Wall Street Journal just ran an article noting the unusually high number of signed real estate contracts canceled by home buyers. There are three primary exits for a home buyer once the real estate contract is signed.

  1. Attorney Approval: During the first 3 to 5 business days the real estate contract will allow for attorney approval. Either party may exit upon the objection of their attorney. This is often a no questions asked, no justification required ,exit.
  2. Inspection: Pursuant to the standard Capital Region Multiple Listing real estate contract, the buyer may cancel the contract should a licensed home inspector identify more than $1,500 in structural defects. A structural defect is not a leaky sink, it’s usually a problem with the roof or foundation that exceeds $1,500 to repair or replace.
  3. Mortgage Approval: More common these days, the buyer may cancel the real estate contract if they are unable to secure a mortgage at a reasonable interest rate and on reasonable terms (usually a 30 year fixed rate).
These three primary reasons for canceling a contract will usually allow the buyer to receive a full refund of their deposit. Note every real estate contract should have time limits in which the home buyer may invoke the contingency. Usually the home buyer has 12-14 days from the date of contract to invoke the inspection contingency and 25-30 days to invoke the mortgage contingency.The numbers of canceled contracts may be up because listing agents have not properly pre-screened the offer. Too often in  a buyer’s real estate market, sellers and agents are overly eager to take the first offer presented. But the first offer may not be the best real estate offer, and it takes some patience and perspective to wait for the right home buyer. Monticello takes extra care to review the home buyer’s offer and all contingencies to determine how likely the offer is to finally close. In order to evaluate the buyer, you may want to look at the following:

  1. how much the buyer is putting down,
  2. is the prequalified,
  3. what type of mortgage is the buyer getting,
  4. is the buyer using a local or out of town bank,
  5. does the buyer need to sell their home before they buy,
  6. is the buyer’s offer contingent upon any other events.

No one has a crystal ball, and there will always be events that we cannot control for during the contract period. However, if you take the time to properly review the home buyer’s offer and all of it’s contingencies before accepting, it will help to minimize problems down the road. Monticello stands by our sellers to make sure its a successful and simple home selling experience. You can read more about Monticello’s sophisticated techniques for selling Saratoga and Albany real estate.