Looking At Offers
When discussing offers with your Realtor, there will be several important things to consider other than the offer price. Offers with low intial deposits and down payments are more likely to fall out of escrow, although they are common. It's also very common for buyers these days to ask for a credit back at the close of escrow, so make sure your Realtor checks the entire contract to verify whether or not any credits are being asked for, and the amount. The offer will also specify how long the buyer will need to close, 30 days is typical, but some buyers are able to close in as little as two weeks.Yet others with special types of financing may require 45 days or more to close.
Another important area is the city transfer tax, which is simply a city tax on the transfer of property from one person to another. Oakland has one of the highest transfer tax in the state. Being $15 per thousand, it will be of the biggest expenses of the sale next to the brokerage fee. Typically in Alameda county, the city transfer tax is split 50/50 among the buyer and seller. If the offer you receive does not state that the buyer will split this tax, you may want to make a counter offer to ask for it to be split. This can mean a difference of several thousand dollars in your pocket at the close of escrow depending on the purchase price.
Liquidated damages and arbitration is another area tha deserves attention. The liquidated damages section of the offer is where the buyer(s) indicate whether or not they agree to forfeit either their deposit or 3% of the purchase price, whichever is more, in the event that the buyer breaches contract. In most offers the buyers agree to this. The arbitration clause refers to whether or not any disputes arising out of the transcation can be resolved by mediation/arbitration therefore eliminiating the need to go to court.
Contingencies refer to the time period in which the buyer can verify that their financing is in place, that the home insurable, and peform any inspections on the property that they wish. Up until the buyer formally removes these contingencies, they have the right to walk away from the deal without the risk of losing their deposit. If they formally remove contingencies and then try to back out, the seller will have have the right to keep the buyers' deposit. This time frame can range anywhere from 0-21 days. These days It's pretty rare for someone to submit an offer with no contingencies, because that means the buyer is waiving his or her right to make sure they can get the loan, inspect the property and so on. In the white hot market of a couple years ago it was more common for buyers to waive contingencies because it makes an offer a lot stronger, and when properties were selling for 100k over asking price people felt they had to do all they can to get their offer accepted. Most buyers should not need anymore than 7-14 days to remove all contingincies.After deciding to accept an offer, escrow will be opened and the clock starts ticking towards the close. The first couple of weeks is usually enough time for buyers to remove contingencies, this is one of the benchmarks we use to guage how well the escrow is progressing. There are a certain percentage of transactions that fall apart, mostly due to buyers backing out or not performing. It's important that if the buyer is more than a few days late removing contingencies that your Realtor get a hold of the buyers' agent and find out what's going on. If they have a sensible answer as to why their late it's probably worth giving them a couple of more days. If they sound like their stalling or not making sense, it would be a good idea to have your Realtor send them a 24hr notice to perform. This is a document stating that unless the contingencie(s) are removed witin 24hrs, the seller will cancel the contract.
Once contingencies are removed, it's usually just a matter the loan being "funded" which means the money has actually been wired to the title company and is ready to be transferred to the seller. There will be appointments set by the agents for the seller and buyer to sign their respective documents at the title company, and once the new deed is "recorded" at the county recorder, it's done!