Potential Home Buyers

When the Buyer Writes the Offer
Usually, the buyer will go to consult an attorney to help them strike up the offer. In any case, when the buyer brings you the offer, it is nothing more than a written bid to buy your home. This offer is not legally binding until there has been a “meeting of the minds” and the signatures of all parties to the transaction are signed/initialed on the offer. At this point, you have gone too far to fast. We need to back up a bit and demand some information from the buyer. Any piece of solid (usually written out on paper) evidence that supports the buyer's comments and ability to go through with the sale is acceptable. If the buyer says “no” to give you this information, then they are not really ready to buy your home and you should do some serious thinking about accepting an offer from a buyer like this. Some common documents to ask for are:

              • A bank statement signed by the bank manager (this is the buyer's               personal bank, not the lending institution).
              • The pre-approval letter from the lender (be cautious, lenders are               different from mortgage brokers)
              • Verification of employment (a pay stub or something similar)
              • The buyers current address (if not on any of the above paperwork)
              • A certified or personal check for an earnest money deposit ($500 per               every $100,000 is a good rule of thumb to go by)

Now that you have all of this information from the buyer, it is time to make some phone calls. You should call the employer and ask them how long the buyer has been working with them and weather or not he/she is reliable. You may not have to worry about closing costs nearly as much as your buyer will, but this is the reason to obtain the bank statement. It is standard to estimate about 3.5%-4.5% of the final sales price for the buyers closing costs. This would mean that on a $200,000 sale, the buyer would need to bring roughly $9,000 to the closing table (check the bank statement for savings and checking amounts). The next issue that must be dealt with is a phone call to the lender (whose number will be on the pre-approval letter). I am going to quickly explain the difference between a lender and a broker.

Potential Home Buyers Page 3