Some people may think it’s all smooth sailing one your offer is accepted to buy a home, or once you accept one as the seller. It’s not. There are plenty of ways a contract can fall apart, and for many different reasons. Now every contract is different than the next, so each experience will vary. But here’s a list of ways there will still be negotiations after a house is put under contract.
As mentioned on my YouTube Channel (you really should subscribe to it), the buyer has the right to get an inspection done during the option period. Think of it as an MRI for the home. Once the inspection report comes back to the buyer, they will usually (not always) file an amendment to either have repairs made, sales price lowered as compensation, or closing costs given in lieu of repairs. There might even be a combination of these. This is the most negotiated part of the contract after it’s been accepted. Repairs and treatments must be done by a licensed professional. There’s repercussions if not done in this manner.
Not all homes appraise for the contract price. If the home doesn’t appraise for the contract price, one of four things can happen: The buyer has the right to back out of the contract all the way up til the closing date and get their earnest money back, the buyer can file an amendment to have the sales price reduced to the appraised value. Seller would have to agree, the buyer and seller can meet in the middle of the contract price and appraised value, and the buyer can bring the extra money to the closing table in the form of extra down payment
I have had all four of these happen at one point or another. In hot markets, it is common when there’s a lack of inventory and a surplus of buyers for people to offer over asking price to secure the home, and just try to beat other offers and not worry about appraisals. They should worry about appraisals, but every story is different.
This can go several ways, being a broad category. For starters, the buyers may no longer qualify for a certain type of loan during the process, but might qualify for a different type. An amendment does have to be filed, and signed by the seller, to allow for this change to happen. If the home doesn’t appraise, and the buyer wants to negotiate or bring the difference, they do so on an amendment as well.
It’s not uncommon for a buyer to have to sell a home in order to purchase a new one. This is called a ‘contingent offer’, and it can be very complicated if not done correctly. During an option period, a buyer may try to include a contingency they hadn’t previously put in the contract as a part of the purchase. I had it happen to me just earlier this year. The seller would then have to agree on the sale being a part, or not. Let’s work through a scenario here. Buyer makes an offer on a home they like, but is contingent on the sale of their current home. The contingency would be on an addendum called the ‘Addendum for Sale of Other Property By Buyer’. In this form, it gives the specific address which needs to sell, and a ‘no later than’ date of which it needs to sell for the contract to stay valid. However, the sellers have every right to accept an offer even if they have already accepted the contingent offer. This new offer forces the first buyers to decide if they want to keep the contingency as part of the sale. If they don’t, they can put down extra earnest money to remove the contingency. If they do, then they can back out and be refunded their earnest money. It’s complicated, which is why a Realtor (me) should always be handling your transactions.
There are a few more situations in which things can still be negotiated, such as extending a closing date or option period, and additional repairs if they weren’t done correctly. It’s not over after contracts have been signed. Not by a long shot. Make sure you’re protected by hiring a Realtor…like me!
So if you’re in the market to buy a home, Contact Me Today! I can help you get set up with mortgage and insurance people to make sure you’re able to buy a home and have the best coverage.
You can also get a copy of my Home Buyers Handbook when buying to learn about the process!