Ryan Kelly

Type of Market / Type of Offer

At our real estate brokerage, we understand that the type of market can greatly impact the negotiation process. That's why we've created the "Type of Market Type of Offer" webpage to provide valuable information on structuring offers based on the type of market. Whether you're a buyer or seller, understanding the market conditions is crucial to making informed decisions. Our webpage includes a grid that outlines different sections of the contract and what could be negotiated in each type of market. From buyer's markets to seller's markets, we provide insights on how to structure offers to maximize your negotiating power and achieve your real estate goals.

Glossary of Offer Terms Based on Market Conditions

Offer Price: The offer price is the amount a buyer proposes to pay for the property, which can vary depending on the market. In a buyer's market, offers are typically lower than the list price, while in a seller's market, offers may exceed the list price.

Earnest Money: This is a deposit made by the buyer to demonstrate their commitment to purchasing the property. The amount generally increases in a seller's market as a sign of stronger buyer intent. Section 5 of the Texas Residential Contract details the earnest money terms, including delivery timelines and conditions under which it may be refunded.

Option Money and Option Period: Option money is paid to secure an option period, during which the buyer can terminate the contract for any reason. The length and cost of the option period typically decrease as market competition rises. This is outlined in Section 5B of the Texas Residential Contract, which specifies the buyer’s right to cancel within the option period.

Title Policy (Owner’s Title Policy): A title policy provides protection against title defects and claims on the property. In a buyer's market, the seller often covers this cost, but the responsibility can vary based on negotiations. Refer to Section 6 of the Texas Residential Contract for specific guidelines.

Survey Deletion (Boundary Endorsement): This term involves amending or deleting the boundary endorsement from the title policy, which impacts how boundary discrepancies are handled. Section 6A(8) of the contract covers this option, detailing cost responsibilities.

New Boundary Survey: Required when the existing survey is unavailable or unacceptable to the lender or title company, a new survey ensures accurate boundary information. The responsibilities for obtaining a new survey are outlined in Section 6C of the Texas Residential Contract.

Service Contract (Residential Service Contract): This optional contract provides coverage for repairs or replacements of home systems and appliances. Either the buyer or seller may pay for this service, depending on negotiations. Section 7H of the contract describes the details.

Seller Leaseback: A leaseback allows the seller to stay in the property post-closing, typically with agreed-upon rent terms. Section 10 of the contract covers possession and provisions for leaseback arrangements when mutually agreed upon by both parties. TXR 1910 Seller’s Temporary Residential Lease should be added to the offer / contract if a seller leaseback is negotiated.

HOA Fees (Homeowners Association): If the property belongs to an HOA, there may be mandatory fees, which can be negotiated based on the market. Section 6E(2) of the Texas Residential Contract requires the disclosure of HOA obligations. TXR 1922 Addendum for Property Subject to Mandatory Membership in a Property Owners Association should be included with the offer / contract if the property (non condominium) is located in a property owners association (homeowners association).

Appraisal Waiver: An appraisal waiver allows the buyer to waive the right to terminate the contract if the property’s appraisal does not meet the lender's requirements. There are options for full or partial waivers, or an additional right to terminate as outlined in the TXR 1948 Addendum Concerning Right to Terminate Due to Lender’s Appraisal.

While this list covers the main areas of negotiation in real estate offers—such as offer price, earnest money, title policies, and appraisal waivers—there are additional factors that buyers and sellers may also consider. These can include non-realty items, title objections, and specific property conditions, among others. Understanding these terms and how they adapt to market conditions is essential for crafting competitive and informed offers.

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Glossary of Offer Terms Based on Market Conditions

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