Accepting a contract means a seller and a buyer have both signed a purchase contract. The process starts when a buyer drafts a purchase contract with the terms they are comfortable with (price, terms of financing, timeline for inspection, etc) and presents it to the seller as their "offer". Offers are on a purchase contract, but not legally binding unless and until both parties have signed and agreed to all terms.
It is possible for a seller to draft and stipulate their own terms on a contract/offer and require a buyer to use that contract/those terms (though not very popular). When the offer is presented to the seller, a certain amount of time is usually given to the seller to accept the terms or the contract is nullified. The most common length of time is a range from 24 hours to 3 days. If it's a very popular property and the buyer wants to push the seller to accept their offer quickly before possibly being presented with additional offers from other interested buyers, they will ask for the short 24 hour decision/acceptance.
Sellers sometimes feel anxious to accept the first offer they receive. Accepting a contract from a buyer can seem easy, especially if you've only received one offer. You may think... this might be the only offer I get, I should take it. But it's very important for sellers to be knowledgeable about the strengths and weaknesses of contracts before accepting one, no unnecessary time or money is wasted.
You may get one offer. Or you might be lucky enough to multiple offers! The "offer" is a sale contract. Offers come in the form of a contract, and there are different versions. However, the included terms within these contracts (offers) are mostly the same. For instance, it must include both the Seller and Buyer (parties) names. It must list the property address and should include the legal description and folio number.
Just remember. until you sign something, it's just an "offer" to buy. But once you do sign, that becomes an executed contract and is legally binding. You want to make sure you accept an offer (contract) you understand, and are happy with. As the seller you can certainly change any of the terms in the offer to your liking. So it's very important you understand what you're signing. Don't bind yourself to a contract that could waste your time and money!
If you have been presented an offer that you like, make sure to consider the other key terms carefully in addition to the proposed purchase price BEFORE accepting a contract! They are as important! Pay close attention to how much escrow (deposit) the buyer is committing to and when they will pay. Make sure any inspection is done within two weeks of signing the contract, because the inspection results can often kill the contract. Consider carefully, the type of financing the buyer plans to use (cash, conventional, FHA, VA?). Each type brings strengths and weaknesses, you should know which will lead to the most viable closing.
The most common pitfalls a sales contract falls into: escrow not paid in time, inspection results not accepted, appraisal too low, financing declined, - other obscure issues; condo approval either owner or lender
The most common contract pitfalls include:
Other less common issues include condo approval declined, buyer not accepting condo or HOA financials (shaky financial state, too many foreclosures in the community, not enough money in reserves, not enough parking spots, won't allow company vehicles, etc).
Make sure to read the contract thoroughly, and consider all of the terms very carefully. Sellers have the ability to change any of the terms to strengthen the contract, make sure you are fully aware of how strong the offer is, and if there is anything you need to change to strengthen it.
Lastly, before accepting a contract, make sure to get a copy of a buyer's prequalification or preapproval if financing is involved. This shows that the buyer is serious, has already begun working on financing, and a lender initially thinks this buyer will meet a bank's qualifications (income, debt, credit score etc) for obtaining a loan, for the amount on the offer/contract.
A prequalification or preapproval is not a 100% guarantee the buyer will obtain the loan they are seeking, but it is a strong step in the right direction. Accepting an offer from a buyer that hasn't started trying to obtain a mortgage (if they aren't paying all cash) is never a good idea. You've done your part by fixing up curb appeal and home staging, and prepping for a property inspection. Your buyer should do his prep work by starting the process of getting financing.
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