When you put your home on the market, one of the most exciting—and daunting—parts of the sale process is reviewing the offers from potential buyers.

Each offer contains a variety of terms and components that can greatly affect the contract and sale process. When comparing multiple offers, it’s rare that there is an objective “Best Offer,” and it’s not an apples-to-apples comparison, but rather apple vs orange vs banana vs pear.

Offer Method
In a unique to South Jersey method, offers are usually presented on “Proposals to Purchase.” These are non-binding documents, but list the terms the buyer is offering.

In nearly all cases, once an offer is selected the contract is drawn on the New Jersey Realtors Standard Residential Contract. You can preview the contract here.

Responding to Offers
Any offers can be responded to with Accept, Decline, or Counter on any one or more terms of the offer.

Offer Timeline
Customarily, Proposal to Purchase will state the buyer will rescind the offer in 3 days if seller does not accept. Seller can take their time to respond, but around 3 days is customary. However, as this is a non-binding offer, buyer can rescind at anytime (i.e. if they have another offer accepted, saw another house)

Key Contingencies
Contingencies are conditions that must be met for the transaction to close. Common contingencies that are addressed in offers include:

• Inspection Contingency

• The standard terms grant the buyer 14 days to complete inspections. If defects are found, they can request the seller address the defects. Should seller agree, the sale moves forward. Should seller not agree, the buyer may choose to terminate the contract or move forward.

• There are specific terms for Wood Destroying Insects (termites, etc) – that is the only repair the standard contract obligates seller to address if defects are found, up to 1.5% of the purchase price (though it’s usually not that much).  

• Mortgage Contingency

• Typically, a higher down payment shows the financial qualifications of the buyer.

• An appraisal contingency is not specifically listed, but is part of the mortgage contingency. In the standard terms, should the appraisal have an issue with the value or condition of the house, buyer and seller negotiate at that time how to address.

  •  You may see in offers that buyers will offer specific terms to address the appraisal, including:

  • Offering to cover a “gap” if the appraisal comes in less that the agreed upon sales price.

  • Offering for buyer to address repair issues that arise from the appraisal process and the mortgage lender requires to be addressed prior to closing.

• Certificate of Occupancy

  • The typical terms state that seller shall obtain the municipal Certificate of Occupancy. Buyers may include in their offer to take on that responsibility, or limit the cap of what seller has to spend.

  • The contract states the seller is obligated to spend up to 1.5% of the sales price, but commonly this is capped at $500.

• Different Types of Mortgages

When reviewing offers, the type of mortgage a buyer chooses can impact the sale. Here are a few common types:

• Conventional Loans: These are not guaranteed by the government and usually require a higher down payment. A buyer with a conventional loan often has strong credit, which may indicate financial stability.

• FHA Loans: Backed by the Federal Housing Administration, these loans allow for lower down payments and are easier to qualify for, making them popular among first-time home buyers.

• VA Loans: Available to veterans and current military members, VA loans are backed by the Department of Veterans Affairs. They offer the advantage of no down payment, which can be attractive but may also result in a lower initial offer price.

• USDA Loans: Aimed at buyers in rural areas, these loans are backed by the United States Department of Agriculture and also offer the possibility of no down payment.

• NJHMFA Grant – This is NJ State grant to first time home buyers, provided as a secondary mortgage. These can take a little longer to close and in my experience about 50% of the time lead to closing being delayed past the original date, depending on how well the buyer and their lender process the paperwork.

• FHA, VA, and USDA Loans are backed by the government, and come with a few more rules. Their appraisals are more thorough in checking for safety issues (peeling paint, broken glass, handrails) that might come into play with a property that needs updates.

Analyzing Offer Terms

Other terms you’ll see reflected in offers are:

• Earnest Money Deposit: Higher earnest money might indicate a more serious and/or well qualified buyer. This money is returned to buyer at closing, but may be at risk if the buyer breaches the contract.  

• Concessions/Credits: Offers where the buyer asks for contributions towards closing costs can effectively lower the net amount you receive. Buyer may want the funds to afford closing costs, or to fund planned updates to the property.

• Compensation to Buyer’s Broker: It is very common for sellers to contribute to the buyer’s cost for their real estate professional. Buyers have signed an agreement with their agent that they will pay them a certain amount, but often offers request that seller’s contribute to fully or partially help them with that obligation.

• Closing Date: Depending on your circumstances, you might prefer a faster or slower closing.

The Role of "Love Letters"

"Love Letters" are personal letters from a buyer to a seller expressing why they feel a connection to the property. While these can be touching and influence a seller’s decision emotionally, they are increasingly viewed with caution. They can inadvertently lead to fair housing violations by revealing personal details such as family status, religion, or race, which should not be considered in a housing transaction. Some states have even begun advising agents and sellers to avoid these letters to prevent discrimination.

Conclusion

I am absolutely here throughout the process. Please reach out with any and all questions on any offers you received and we can discuss in detail.