Items of Negotiation

Sales price is just the beginning when it comes to negotiation of a contract.  There are many other items that are also worthy of paying attention to in a Residential 1-4 Family Resale Contract.

Here are some of the most important negotiation items:

1.  Financing and Contingencies

In today's volatile lending environment, it is important to check out the amount that a buyer will be putting down in cash on a home.  While 100% financing is not impossible, it is worthy of a little research to make sure the buyer is preapproved by a reliable lender.  Any third party contingency should be accompanied by a letter from the lender for a seller's review before signing an agreement.

2.  Earnest Money

Earnest money amounts are different depending on what part of the country you are buying a home.  Here in the Houston area an offer can come in with less than 1% being held as earnest money.  Should the buyer default, this amount will often not cover a mortgage payment.  Earnest money that is low on an offer is an item that can be countered to better protect the seller.

3.  Who pays for Title Insurance

In Texas, most often the seller pays - but this is a negotiable item and a definite cost in closing.

4.  Who pays for Survey

Many times a seller can sign an affadavit stating that the existing survey has not had any changes.  This will often allow for a buyer to re-use the existing survey.  Care should be taken in this item, however, that it is clear who will pay for a new survey should the existing one fail to be accepted by the lender.

5.  Repairs

Repairs can be requested as a part of the initial offer if they are obvious to the buyer.  Expect additional repair requests to be a negotiation item during an option period after the buyer has had a chance to inspect the property.

6.  Residential Service Contracts

A Home Warranty is highly recommended because it helps to resolve disputes if items should happen to break during the first year after a home is purchased.  It is common for a buyer to ask for the seller to purchase a one year home warranty, and in general, this is not the best place to try to counter - if they want a warranty, buy one.

7.  Close Date

When you are selling a home, time is money.  Often the faster the better - however, if you want to wait until school is out, or until your new home is constructed, these dates may be more important.

8.  Possession

Usually possession is upon closing and funding (money changes hands!), however, in certain circumstances a seller or buyer may arrange for a temporary lease.  When it comes to possession, agreements should ALWAYS be in writing.

9.  Special Provisions

This area should be reserved for factual statements only.  The contract is meant to be "fill in the blank" so a Realtor is NOT practicing law.

10.  Payment of Buyer's Settlement Expenses

It is becoming more and more common to see a buyer ask for the seller to cover a certain amount of their expenses.  Many times a seller's first reaction is to  be offended, however, it is important to look at the bottom line, or NET proceeds, after the contribution is subtracted out.

11.  Termination Option

A buyer will offer a nominal dollar amount for the unrestricted right to terminate a contract during a certain number of days.  Both the days and dollar amounts are negotiable.