How to Evaluate a Texas Real Estate Offer
I recently did a walk-through on a property that was closing with our buyer the next day. The contract stated in Special Provisions paragraph 11: “home and carpet to be professionally cleaned prior to closing date”. Upon viewing the property, the sellers had not completed the carpet cleaning. The seller was at the home removing some final items. When I asked “have you scheduled the carpet cleaner?”, the seller said matter of fact “no, we are not cleaning the carpet”. They did have a maid service there working though, which we later learned was not because they or their agent read the contract, but because they didn’t want to clean it themselves.
I said nothing further about it and left with my buyers. It would not be proper to start a discussion there with the sellers about their compliance with the contract terms. I called Sylvia as I drove away and she called the listing agent to inquire if the sellers knew that they’d agreed to clean the carpet, and to make sure it gets done.
Sylvia told me the listing agent got out the contract on her end, read paragraph 11, then stated “whoa..ho..ho. aren’t you the sneaky one!” Then the listing agent went on to lament what a great deal our buyers were getting, how the sellers were “giving the house away”, etc. To which Sylvia replied simply “The seller agreed in the contract to have the home and carpet professionally cleaned. I just need to make sure you know that. We expect it to be done as agreed”. The listing agent did finally say that it would be done, but was indignant and acted as if some sort of trick had been played upon her and her sellers.
It was done and the deal closed and the buyers are very happy with the purchase and the home. But the listing agent’s incompetence and attitude is unfortunately NOT a rare case. You wouldn’t believe how many buyers and sellers fail to carefully read what they sign, or don’t understand what they do read, and how many agents fail to properly guide their clients through a proper evaluation of an offer.
So what is the best way to make sure things are not missed or overlooked when evaluating a real estate sales contract?
If you’re one of our sellers, we run your offer through a checklist I created, which will sum up the offer’s bottom line and reveal all items of concern or question. Let’s take a look at the “offer checklist” Sylvia and I use and the more than 40 data points that have to be considered.
Offer Price: $ _____________________
Para 7H – $ _____________________
Para 12(a)1B – $ _____________________
Other: – $ _____________________
Net Offer: $ _____________________ = $ _____________________ below list price.
The above looks at the offer price then subtracts from it items such as the cost of the home warranty, buyer closing costs, and any other amounts the buyer may have written in. This gives us our “Net Offer Price”, which is really the only number I want my seller to focus on.
Dates and Timelines:
Closing Date: _______________________ = ____ days
Option Period: ______ days Option Fee: $ ________
Next, the above makes sure we understand the basic time lines and dates. In most instances, barring anything strange emerging from the remaining checklist below, the above information represents what a seller will be looking at the most in considering an offer, which is how much is the offer and when do we close.
But the devil is in the details. Everything below is styled on our checklist sheet such that anything in the “no” column will draw our attention and either have to be corrected in a counter-offer or deemed acceptable by the seller.
I haven’t included the Yes-No-N/A checkbox columns to the right of each item here, due to formatting issues, but imagine straight columns to the right of each item. The review questions are styled such that a “yes” answer means everything is ok, or to the seller’s advantage, on that contract item.
If you’re not familiar with the standard sales contract in Texas, some of the items may not be clear, but the below list does in fact represent almost everything a good agent should be checking and double-checking on an offer, including whatever is written into Special Provisions para 11, so that the seller can be made aware of exactly what is being agreed to.
Loan: Is pre-approval letter included with offer? [ ] Yes [ ] No [ ] N/A
Para 2D: Are all exclusions, if any, written in? (blank if none)
Para 3: Numbers add up right and in the right order?
Para 4: Correct loan amount and matched to para 3?
Para 5: Earnest Money amount acceptable?
Para 5: Title Co. info correct/acceptable?
Para 6A: Correct Title Company?
Para 6C1: At least 7 days? Buyer box checked?
Para 6C1: Do we have affidavit and survey in hand?
Para 6D: Is this blank, or is whatever written ok?
Para 6E2: Correct box checked?
Para 7B: Is box 1 checked?
Para 7D: Is box 1 checked or is box 2 acceptable wording?
Para 7H: Is Home warranty amount acceptable?
Para 9: Closing date acceptable, not a weekend/holiday?
Para 10: Is “upon closing and funding” box checked?
Para 11: Is it blank, or language acceptable?
Para 12(a)1B Is the amount acceptable or blank?
Para 16: Is mediation “will” box checked?
Para 21: Is this complete?
Para 22: Are all applicable boxes checked?
Para 23: Is the amount and number of days acceptable?
Para 24: Signed by the necessary parties?
Broker Page: Is the commission amount correct?
Broker Page: Are all boxes properly checked and info complete?
Addendums and Related Paperwork:
Disclosure Notice: Signed and initialed in all places?
Third Party Finance: Amount matches, days ok?
HOA Addendum: Box A1 ok? Amount in para B ok? HOA name?
Lead Paint (b4 1979): D2 checked, signed by all & agents?
Non-Realty Items: Items included are ok?
Septic Addendum: Completed properly?
Intermediary: Completed if other agent is KW?
This checklist, though thorough, leaves a few obvious things out, such as making sure pages are not missing, names are spelled correctly, property address address is correct, etc. We still check those things from habit, but it wouldn’t hurt for me to add them. If I revised and added every nuance and detail, there would be well over 50 items on a checklist like this.
Seems like a lot to look at for a sales offer, right?
Well, if you are a listing agent and don’t want to get stuck with a $250 carpet cleaning bill, or have to pay for the buyer’s new survey (as many listing agents we’ve dealt with have), or have to wrestle with the buyers over Grandma’s chandelier which you forgot to instruct the sellers to write in as an excluded item; if you want to avoid all of that, you would be wise to have a system in place to make sure you carefully review all aspects of the contract before you present it to your seller.
And the good news is, you can use my form. I freely share it below because no matter who we represent, things go much better if both agents know what they’re doing and don’t make mistakes. Feel free to use this form and offer any feedback or ideas for improvement.
Offer Worksheet for Listings