Ideas By Sky

The culmination of your and your agent’s efforts to sell your property or find a suitable buyer occurs when you and the prospective buyer form a legally binding sales contract. Most often this contract is agreement of sale, agreements installment contracts are also used. In any case, the contract states the specific rights and obligations to which both parties mutually agree.

Your agent will expedite negotiation of the contract. When acting as an agent for you, she will advocate and is obligated to negotiate the most favorable terms for you. While your agent ultimately wants to bring the parties on both sides of a contract to agreement, she must remember that the priority is to serve you. Mishandling confidential information or any other conduct that harms your bargaining position is a violation of the agent’s fiduciary obligations.

Your agent will be your biggest support since she will be negotiating on your behalf. You will soon understand that she will be able to separate the roller coaster of emotions from the whole buying process since she will be able to advocate professionally and make sound decisions by removing herself from the fear of losing the home. Your agent should live up to the fiduciary duties promised to you, that is why she should make every imaginable effort to get you a better deal. Additionally, your agent will support you to write down the strongest offer letter possible, containing all the contingencies you need to shield yourself.

There are five primary negotiating points in a real estate contract. Please see them below

There are some facts for us agents such as at the very core of our fiduciary duty to you that we will sell your house at the best price. As John F. Kennedy famously said, “Never negotiate out of fear, but never be afraid to negotiate.”

1. Price

There are some ways that you can in fact increase your asking price by providing some leverage to the buyers. There might be some strategies that your agent should consult you especially if you are in urgency or have special situation. As you know, closing costs such as appraisal fees, inspection costs, and attorney fees usually amount to about 3% of the selling price. However, many buyers are often cash-deprived because of other expenses like down payment, renovation costs, moving expenses, etc. Therefore, most buyers cannot usually afford to close the deal unless they are assisted with some of the costs.

One of the real estate negotiation strategy you can use is to consider to pay the closing costs. When making an offer, buyers will often request you to pay the closing costs. Consenting to a buyer’s request to pay for closing costs often leads to a much quicker sale. However, to ensure that you preserve your margins, you can counter by increasing your asking price. Just make sure that the price you quote will be approved by the buyer’s lender.

2. Terms

At the end if the day, your opinion will be the only thing that matters. I suggest for you to save your opinion when you are just beginning the negotiations. You might have been already using this tactic in your other personal or financial transactions. When you allow the buyer party make the first offer,  you have the upper hand right from the start. You get to see where their starting point is and you can use that to your advantage when negotiating the terms of the contract.

3. Dates- Closing and Possessions

In real estate, time is of the essence, meaning critical ingredients can shape the sale either positively or negatively. Examples such as logistics for the buyer’s relocation, the timeliness of the  buyer’s lender to assist on loan matters and even the inspections/ local contractors’ urgency on fixing required items may delay your closing date. It is important to keep in mind to negotiate all important dates when you are at the counteroffer stage. Your agent advise you to a date of closing clause as below:

“Date of Closing. Subject to the conditions stated in this Agreement, the sale by Seller and the purchase by Buyer of the Assets pursuant to this Agreement (the “Closing”) shall occur on May 15, 2018, or such other date as Buyer and Seller may agree upon in writing. The date on which the Closing actually occurs shall be the Closing Date.”

4. Inclusions and Exclusions

When you buy a home, items you see during the showing are either included with the property, or excluded from the sale.

Property may be classified as either real or personal. Personal property, sometimes called personalty, is all property that can be owned and does not fit the definition of real property. An important distinction between the two is that personal property is movable. Items of personal property, also referred to as chattels, include such tangibles as chairs, tables, clothing, money, bonds, and bank accounts.

A fixture is personal property that has been so affixed to the land or a building that, by law, it becomes part of the real property. Examples of fixtures are heating plants, elevator equipment in high rise buildings, radiators, kitchen cabinets, light fixtures, and plumbing. Almost any item that has been added as a permanent part of a building is considered a fixture.
Over time, the same materials may be both real and personal property, depending on their use and location.
The overall test used to determine whether an item is a fixture (real property) or personal property is a question of intent. You should ask yourself when negotiating inclusions and exclusions:

• Did you install the item intend it to remain permanently on the property or to be removable in the future? In determining intent, courts use the following three basic tests:
• How permanent is the method of attachment?
• Can the item be removed without causing damage to the surrounding property?

Adaptation to real estate is the item being used as real property or personal property. For example, a refrigerator is usually considered personal property. However, if a refrigerator has been adapted to match the kitchen cabinetry, it becomes a fixture. It is important that an owner clarify what is to be sold with the real estate at the very beginning of the sales process.

5. Contingencies

Additional conditions that must be satisfied before a sales contract is fully enforceable are called contingencies. Contingencies create a voidable contract; if the contingencies are rejected or not satisfied, the contract is void. A contingency includes the following three elements.

The most common contingencies include the following:

• A mortgage contingency, which protects the buyer’s earnest money until a lender commits the mortgage loan funds. In Pennsylvania, a mortgage contingency must state the type and amount of the loan, the maximum interest rate and minimum term, the deadline by which the buyer shall obtain the loan, and the nature and extent of assistance that the broker will provide in helping the buyer obtain the loan.
• An inspection contingency; a sales contract may be contingent on the buyer’s obtaining certain inspections of the property. Inspections may include those for wood-boring insects, lead-based paint, structural and mechanical systems, sewage facilities, and radon or other toxic materials.
• A property sale contingency, whereby buyers may make the sales contract contingent on the sale of their current home. This protects the buyers from owning two homes at the same time and also helps ensure the availability of cash for the purchase.
• An insurance contingency, whereby buyers may make the agreement of sale contingent on obtaining affordable homeowner’s insurance.

The seller may insist on an escape clause, which permits the seller to continue to market the property until all the buyer’s contingencies have been satisfied or removed. The buyer may retain the right to eliminate the contingencies if the seller receives a more favorable offer.