Making an offer on a home is an exciting endeavor, but it can come with daunting prospects. Not everyone is prepared for the legalities of a purchase contract and negotiations. While an experienced real estate agent should help you navigate every step of the process, it’s also wise to prepare yourself for a wide range of scenarios that often come up in home transactions. Take a look at this buyers’ list of frequently asked questions and discuss them with your Realtor if you think any of these situations will apply to you. More complicated legal scenarios could require a real estate attorney.
What happens if I make an offer that is open for 24 hours but I change my mind before the end of that time and before the seller has responded? You can revoke an offer at any time prior to the seller delivering signed acceptance of your offer.
What happens if my offer is one of several offers? Will the seller give me a chance to increase my price? A seller who receives multiple offers is not obligated to tell all parties that other offers are on the table or what amounts are being offered. The seller may accept whichever offer she feels is the best offer, whether that be the highest offer or the offer that comes from the most financially sound buyer, or both. Sometimes sellers in multiple offer situations give an additional deadline for all buyers to submit their best and final offer, which allows you another chance to increase your price. However, this is not always the case, so Realtors often suggest you give your best offer the first time for a home that is likely to be in a multiple offer situation.
Can I get back my earnest money if I change my mind about buying? The answer depends on what your purchase contract states and the timing you have to terminate the contract. Buyers usually (and should) include an inspection contingency in the purchase contract which states that the contract may be terminated with the return of all earnest money after a home inspection. The contingency clause includes the timing in which the buyer needs to terminate (usually around ten days from the date of the accepted contract). You’re within your legal right to get back your earnest money if you performed according to your contract. If you didn’t have this contingency in your contract or you changed your mind after the stated deadline passed, it may be difficult to get the return of earnest money. The seller might return it by their free will, but you can’t count on it.
Do I get back my earnest money if my financing falls through? As long as you have a financing contingency in your contract, yes. Standard purchase contracts include a finance contingency which allows a specified time to obtain financing (timing varies from two weeks to 30 days from the date of contract). If you can’t find a lender who will finance your loan, then the contingency in the contract allows you the return of earnest money.
What are other ways I would get my earnest money back? (1) Besides inspection and financing contingencies mentioned above, you’d also get your earnest money back if the house you want didn’t appraise for the amount you’ve offered. (2) If you had a sales contingency in your contract where your old house needed to sell by a certain time before buying the new house, but it didn’t, you’re able to get your earnest money back. (3) And if the seller backs out for whatever reason and doesn’t sell you the home, it’s your right to have earnest money returned.
What happens if the seller makes a counteroffer to me but then accepts someone else’s offer? The seller needs your signed acceptance of his counteroffer for the contract to be valid. This is one reason that timing is so important in purchase contracts. If you waited outside of the timing specified in the counteroffer, the offer is considered terminated and the seller is open to accepting another offer. However, if you did accept within the timing stated in the contract and the seller still accepted another offer, then the seller could now be bound to two contracts and two buyers.
Is a purchase contract enforceable if it doesn’t give a buyer the opportunity to inspect the property prior to closing? Yes, it is. However, it’s considered to be in the best interest of both seller and buyer to have an inspection contingency in the contract.
Why is it important for our purchase contract to be signed by both spouses who are selling? Both spouses’ names are required to create a valid contract. If only one spouse signs, the contract can’t transfer clear title to the property.
Note that answers provided follow Ohio law. Answers could be different for other states.
Real Estate Term of the Week
Performance of Contract: Fulfillment of the obligations by the parties. The parties who make the contract must fulfill their obligations according to the terms written in the contract.