Every home sale is going to be a little different so let’s start by defining a few basic terms:

**Option Fee- A fee paid to the seller to cover the cost of the buyer’s “Option Period”. This fee will be deposited with the title company within the first day or two after the contract is signed by all parties. This is yours to keep if the buyer terminates the contract. If the buyer completes the purchase of your home the amount of the option fee is applied directly to their purchase price as already paid.

 **Option Period- The buyer has the right to terminate the purchase contract for any reason whatsoever during this timeframe. This is a specific number of days from the date the contract is executed, typically 12-14 days in our market. During this time the buyer will perform inspections of your home. 

**Earnest Money- This is a deposit made by the buyer into an escrow account with a title company showing the buyer's good faith and that they are serious about purchasing your home. When the purchase is finalized, the funds are credited towards the buyer's down payment.

**Appraisal- A property appraisal is an estimate of a home’s value. Home value is based on several factors such as location, features, floor plan, updates, condition and recent sales of similar nearby homes. This will typically take place after the Option Period has passed. The buyer’s lender will place the order for the appraisal. This is a necessary step for the lender to approve your home as collateral for the buyer’s mortgage loan. 

 **Survey-  An assessment to determine the boundaries of the property owned. It is a sketch of the property showing its boundaries and physical features and also any easements or encroachments on the property.

**Title Insurance Policy- Title insurance protects property owners against specific loss. For a one-time premium paid at the closing, a title policy insures against events that occurred in the property’s past. It protects against claims from defects such as another person claiming an ownership interest, improperly recorded documents, fraud, forgery and liens.

And a few more things…

**Expect 30-45 days from the day your contract is accepted to close on your home.

**During the Option Period and after the buyer has performed their home inspections, it is common for the buyer to request that you make specific repairs to the home based on the information revealed in the inspections. It is important to understand that you are not required to pay for or perform any repairs, however the buyer also has the right and option to terminate the sales contract for any reason during this time as well. Any repairs agreed to during this time will be addressed specifically in a written amendment signed by both you and the buyer. These repairs must be completed by a licensed contractor. 

**What happens if the buyer backs out during the Option Period? --You keep the Option Fee and your home goes back on the market to find a new buyer. 

**The contract sale price on my home is $350,000 and the Appraisal came in with a value of $345,000. What happens now with the $5,000 difference? --The buyer’s lender is only going to fund the loan based on the Appraisal Value so there are several possibilities, three of which are noted here. (this does not cover all possible options- just some of the most common) --You reduce your sale price- The buyer brings more cash to the table to make up the difference- You split the difference with the buyer.