8 Reasons to Watch offers to purchase your home after auction

By Paul Costello

Your home auction has finished and the buyer has made an offer for your home and has written an ‘offer to purchase’ agreement. If you have not seen a real estate contract, it might be a good idea for you to look at one. By studying a blank real estate contract it will give you some knowledge of its workings and this will make the buyer’s offer easier to understand. You will be able to recognize terms being used by the buyer, which may not be standard or may be unusual in some way. Understanding makes the whole process easier for you.

If the buyer of your home auction has added to the “special clause” box, which is located above the signature, you will want to read, digest and understand these special demands. The buyer may want you to cover some of the closing costs, which you are not normally responsible for, or the buyer may want you move out of your home by a particular date. Whatever you do check for this- you don’t want to be out on the streets if your new home is not ready .Oh and don’t forget to read the special clause box!!

There are some things you might want to look out for: whether the sale depends on the sale of the buyer’s home; whether the buyer wants a ridiculous amount of time to obtain money to purchase your home auction selling success; if the earnest money is unusually small, say less than $500. If it is less than this and your home is popular you may want to look elsewhere.( ‘Earnest money’ is the term given to the deposit which shows your buyer is in earnest and can be as high as 2% of the cost of your home. A normal amount is from $500-$2000.) ; if a penalty is enforced if you cannot move by the buyer’s specified date; if the buyer requires the seller to pay the buyer’s mortgage costs. All these things could cause problems such as a delay in the sale of your home and additional costs to you.

Make sure that your buyer has been pre-approved or pre-qualified for a mortgage loan large enough to buy your home. If the buyer is making the offer before gaining either one of these, do not sign the offer.

After you have looked over very carefully the buyer’s offer, there are several options available to you. One is to accept the offer as is. This can be accomplished by simply signing the offer agreement making it a sales contract. Some states require you sign a separate agreement, which is called a “binder”.

Another choice would be to make an alternative proposition. Make notes on the sales agreement and cross out conditions on the offer which you believe to be unreasonable and unacceptable. Alternatively you could just fill out your own sales agreement enabling you to stipulate the conditions you want in place.

Your final option is to reject the offer.

You will want to keep in mind if the offered price is lower than you had in mind, look closely at the offer. Are there conditions, which will compensate for the lower price?

Some home auction sellers will not sign an offer agreement until they have received a minimum of $500 earnest money, however if you have judged the buyer to be a serious buyer, you can do without the earnest money. but make sure you judge accurately or you’ll be left high and dry. The earnest money check should be made out to you, but held by a third party such as your real estate attorney or the buyer’s real estate agent). This check is non-refundable should the buyer default on the contract.

Even though you have signed an offer, you can accept a backup offer. The buyer with the backup offer must be aware of the current pending contract on the house with the first buyer.

So after you’ve completed selling your home by auction follow all these steps and all should end happily! Good luck!!

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