Selling or purchasing a home is an exciting time. But, it can also be a time of great anxiety. In this months article, I have attempted to simplify the process of consummating a contract for Real Estate in Nebraska. Since all Real Estate is unique unto itself, there are circumstances that may arise that add additional steps to a purchase or sale but for all intensive purposes, this is the basic framework of a sales contract in Nebraska. Both the Buyer and the Seller should be aware that after these basic tenants are fulfilled, the contract to sell or purchase is a legally binding document that can be upheld in a court of law.
After a potential Buyer has completed an Offer to Purchase contract with the help of their Buyer's Agent, it is presented to the Seller's Listing Agent, who, in turn, presents it to the Seller. The Seller may accept the offer as written, reject the offer or modify the offer by submitting a counter-offer. If a counter-offer is made by the Seller, the Buyer may accept the counter offer, reject it or submit still another counter-offer. This process will continue until an agreement is reached or until it is obvious that no agreement is going to be reached. Each of the counter-offers presented should have reasonable expiration dates by which acceptance or rejection has to occur and be signed and initialed by the offeree. After an agreement between the seller and the buyer regarding the terms of the sale has been made, and after each party has signed and initialed the final contract, the house is considered sold.
It is also a normal procedure for the Buyer to put down a reasonable cash deposit, commonly known as an earnest money deposit, to bind the Buyer and show the Seller that this is a sincere offer. Upon acceptance of the Offer to Purchase, the earnest money deposit is deposited into the Selling broker’s trust account. After an offer is accepted by all parties in writing, the earnest deposit will be transferred to the Listing broker by issuing a check drawn on the Selling broker's trust account.The earnest deposit will be credited to the Buyer's costs at closing.
However, before the sale can be consummated, all the terms of the contract must be met by both parties. This may include contingencies such as acceptable financing, the sale of the Buyer's existing home, inspections, appraisals and other items deemed important to each party involved. What must be done before the closing on the property depends on the terms agreed to in the Purchase Agreement. In the Purchase Agreement contract, a date will be established on which the closing, or settlement of the sale, will take place. All provisions of the contract are to be met by that date and on that date, final financial matters are completed. The Real Estate Settlement Procedures Act of 1974 governs the closing of most sales. It requires that both Seller and Buyer receive copies of settlement statements which give a full disclosure of the costs involved in the sale. (see my October post concerning "Truth in Lending.") The closing date is also when the seller conveys title to the property by way of a deed and receives the net amount of the sale price agreed to in the Purchase Agreement.
If the Seller refuses to complete the transaction as agreed upon for any reason that is not the Buyer’s fault, the earnest money will be refunded to the Buyer. If, however, the Buyer, after acceptance of the offer, does not follow through with the transaction, the earnest money may be forfeited to the Seller. In addition, the Seller may be able to seek other damages from the Buyer and attorneys may become involved. Disputes can arise between the Seller and the Buyer over the return or forfeiture of earnest money deposits when a transaction is not consummated. You should be aware, as either a buyer or seller, that designated brokers are required to handle the funds as directed by the Nebraska Real Estate License Act and Rules and Regulations. In general, brokers will require a mutual release before releasing the earnest money deposit if there is a dispute.
Selling or Purchasing a home is one of the most exciting times in our lives. It's what makes this business so fulfilling for me, personally. However, it is one of the largest investments most of us will ever make and should not be entered into without educating ourselves on the process and legalities of the transaction.
Until Next Time...