By Elizabeth Putnam, Real Estate Broker | Mosaic Community Lifestyle Realty | Asheville & Western North Carolina
The exciting part is here! But before we pop the champagne, let's talk about what makes an offer a good offer.
Finally... we did it!
We got an offer! Woohoo!
All that hard work preparing your home, creating beautiful marketing materials, scheduling showings, and patiently waiting for the right buyer has paid off.
Someone wants to buy your house!
That's certainly something to celebrate. But before we say "yes to that dress," we need to take a careful look at what the buyer is actually offering.
Because here's something every seller should understand:
Not all offers are created equal.
An offer involves much more than the purchase price. The amount of money a buyer puts down, their financing, the due diligence period, closing date, and requested concessions can all influence the strength of an offer.
My job is to help you evaluate the entire package, understand the potential risks, and negotiate terms that align with your goals.
So, let's dive in!
First, Let's Understand the North Carolina Contract
Before we evaluate the individual terms, I want to explain something especially important about buying and selling real estate in North Carolina.
Our standard North Carolina Offer to Purchase and Contract (Form 2-T) gives buyers considerable flexibility during the due diligence period.
What does that mean? In general, once a buyer and seller have signed the contract, the buyer has the right to terminate the contract for any reason — or no reason at all — during the due diligence period.
They might discover something concerning during inspections.
Their financing plans could change.
They might simply decide the home isn't right for them.
If they properly terminate within that period, they are generally entitled to the return of their earnest money deposit.
The seller, meanwhile, usually keeps the due diligence fee, subject to certain contractual and legal exceptions.
What About the Seller?
Here's where things get interesting.
Once a seller signs a purchase contract, the seller generally does not have the same freedom to change their mind.
There are specific situations in which a seller may have contractual termination rights, such as a buyer's failure to deliver required funds after the proper notice and procedures. A buyer's material breach may also provide remedies.
But a seller can't simply decide they've changed their mind or received a better offer and walk away from an otherwise binding contract.
This is why I believe it's so important to carefully evaluate an offer before accepting it.
We want to understand the buyer, the terms, and the potential pitfalls before entering into a binding agreement.
Once we're under contract, our options become more limited.
Wait! Isn't the Home Being Sold "As Is"?
Here's another important feature of the North Carolina contract.
Under the standard Offer to Purchase and Contract, unless the parties agree otherwise, the property is being sold in its current condition.
In other words, the seller isn't automatically required to make repairs simply because a buyer's inspection identifies something that needs attention. The seller may choose to negotiate repairs or financial concessions, but generally isn't obligated to agree to them unless required by another contract provision or applicable law.
However, there's a catch!
The buyer typically has the right to terminate during the due diligence period.
So while a seller may say, "I'm not making any repairs," the buyer may respond, "Then I'm not buying the house."
This often leads to what I consider the second phase of negotiations: the due diligence repair request.
We'll explore that in greater detail in the next article.
For now, just understand that accepting an offer doesn't necessarily mean we're finished negotiating.
The Eight Key Terms of an Offer
When an offer comes in, there are eight primary terms I want us to review together:
- Offer price
- Due diligence fee
- Earnest money deposit
- Seller concessions
- Home warranty
- Due diligence period
- Closing date
- Type of financing
Each term tells us something about the buyer's offer, their financial position, or their expectations.
Let's break them down.
1. Offer Price: It's the Beginning of a Conversation
The offer price is obviously one of the first things we'll look at.
But I always encourage sellers to remember something:
Please don't take the initial offer personally!
Buyers are negotiating, just as we would be if you were purchasing a home. Depending on market conditions, offers may come in above, at, or below the asking price.
During the COVID-era housing boom, we regularly saw properties receiving multiple offers significantly above asking price.
Those were some pretty wild times!
In more balanced or buyer-friendly markets, it's common to see offers below the list price, sometimes substantially below.
That doesn't necessarily mean the buyer doesn't love your home.
It may simply mean they're testing the waters.
We don't know the maximum amount they're willing to pay.
And unless the circumstances suggest otherwise, I generally recommend considering a counteroffer rather than immediately rejecting an offer we don't love.
Negotiation is a conversation.
Sometimes we can move the buyer significantly. Other times, there may be very little room to negotiate.
The important thing is to evaluate the offer in light of current market conditions and your goals.
2. Due Diligence Fee: The Seller's Financial Protection
North Carolina has a somewhat unusual feature in our real estate contracts called the due diligence fee.
This is a negotiated amount the buyer pays directly to the seller, generally shortly after the contract becomes effective.
Think of it as the money the buyer pays for the opportunity to investigate the property and decide whether to proceed during the agreed-upon due diligence period.
The fee is generally nonrefundable, even if the buyer decides not to purchase the home during that period.
However, there are exceptions, including certain seller breaches and other circumstances provided for in the contract or by law.
If the transaction closes, the fee is credited toward the purchase price.
How Much Should the Due Diligence Fee Be?
That depends on the market!
Before COVID, I regularly saw relatively modest due diligence fees, sometimes between $200 and $1,000.
During the height of the pandemic housing boom, we saw extraordinary amounts, sometimes $10,000, $20,000, or even $50,000.
Those days were certainly memorable!
In today's more balanced market, amounts vary considerably based on price, competition, and buyer demand.
We may see offers with a $500 due diligence fee, while another buyer may offer an amount approaching 1% of the purchase price.
There isn't a required amount. It's negotiable.
Why Does This Matter to the Seller?
Imagine accepting an offer, taking your property off the active market, and then having the buyer terminate three weeks later.
You've potentially lost valuable marketing time.
The due diligence fee offers some financial protection against that risk.
A meaningful due diligence fee may also indicate that a buyer is serious about moving forward.
But remember: A high due diligence fee doesn't guarantee that the buyer will close.
3. Earnest Money Deposit: Another Layer of Protection
Earnest money is different from the due diligence fee.
This money is generally held in an escrow account, often by the closing attorney, rather than being paid directly to the seller.
If the transaction closes, the deposit is credited toward the buyer's purchase.
If the buyer properly terminates during the due diligence period, the earnest money is generally refundable.
However, if the buyer breaches the contract after the due diligence period has expired, the seller may be entitled to retain the earnest money under the contract's liquidated damages provisions. There are exceptions, so we always need to consider the specific contract terms.
How Much Earnest Money Is Typical?
Amounts are negotiable, but I often see deposits in the range of approximately 1% to 2% of the purchase price.
A buyer offering a meaningful earnest money deposit may be signaling confidence in their ability and intention to complete the purchase.
But don't confuse a large deposit with a guarantee of closing.
We still need to evaluate financing, timing, and the buyer's overall circumstances.
4. Seller Concessions: Sometimes the Highest Offer Isn't the Best Offer
Buyers may request that the seller contribute toward their closing costs or other lender-permitted expenses.
These are commonly called seller concessions.
For example, a buyer might offer $500,000 for a property but request $10,000 in seller-paid closing costs.
Assuming the concession is fully used, the seller is effectively receiving $490,000 before other selling expenses.
Another buyer might offer $490,000 with no concessions.
From a simple proceeds standpoint, those offers may be similar.
But there could be other important differences, including financing, appraisal risk, due diligence fees, and closing timelines.
How Much Can a Buyer Request?
That depends on the type of loan, down payment, occupancy, and lender requirements.
For some conventional loans, seller concessions may be limited to 3% of the purchase price, while other circumstances allow higher limits.
The important thing to understand is that seller concessions aren't free money.
They come out of your proceeds at closing. Sometimes they can help make a transaction work for a buyer without requiring a reduction in the purchase price.
And sometimes they can be a valuable negotiating tool.
5. Home Warranty: Worth It or Not?
Occasionally, a buyer will ask the seller to purchase a one-year home warranty.
These plans are intended to provide certain coverage for mechanical systems and appliances, subject to the policy's terms.
The price depends on the company, coverage selected, property size, and optional items such as well or septic systems.
For many homes, a basic one-year warranty may cost less than $1,000.
My Thoughts on Home Warranties
I have mixed feelings about them.
I've seen home warranties help cover expenses associated with a water heater replacement or HVAC repair.
But I've also seen buyers become frustrated with exclusions, service fees, and limitations on coverage.
In my experience, companies may prefer repairing an older system rather than replacing it.
That doesn't mean a home warranty is always a bad idea.
It simply means buyers should understand what they're purchasing.
From a seller's perspective, a home warranty may be a relatively modest concession that helps move a negotiation forward.
As always, we'll evaluate whether it makes sense in the context of the entire offer.
6. Due Diligence Period: Time Matters!
The due diligence period is the negotiated window during which the buyer investigates the property and the transaction.
This can include:
- Home inspections
- Pest inspections
- Radon testing
- Septic and well evaluations
- Surveys and title investigations
- Estimates for potential repairs
- Appraisal and financing arrangements
The length of this period is negotiable.
I often see periods ranging from approximately two to four weeks, although shorter or longer periods may be appropriate depending on the property and transaction.
Many inspections can be completed within the first seven to ten days.
However, obtaining contractor estimates, completing specialized inspections, and coordinating financing can sometimes take longer.
Why Should Sellers Care About the Length?
Because during this period, the buyer generally has the right to terminate without having to provide a reason.
A shorter due diligence period can reduce the amount of time the seller is exposed to that uncertainty.
But we also want to give a serious buyer a reasonable opportunity to complete their investigations.
An unrealistically short due diligence period can create unnecessary complications.
My goal is to negotiate a timeframe that protects your interests while still giving the buyer a reasonable opportunity to move forward.
And while we're talking about timing, there's another important piece of the puzzle...
7. Closing Date: When Do We Hand Over the Keys?
The closing date is the date we're working toward to finalize the transaction, transfer ownership, and hand over the keys!
When evaluating an offer, the closing date is an important consideration.
Perhaps you've already moved out and would like to close as quickly as possible. Or maybe you're purchasing another property and need to coordinate two transactions. Whatever your circumstances, we want to negotiate a closing date that works with your plans.
Understanding North Carolina's 7-Day Closing Extension
Here's something every North Carolina seller should understand.
Our standard North Carolina Offer to Purchase and Contract (Form 2-T) includes a provision allowing for a 7-day delay beyond the agreed-upon settlement date when one party is ready, willing, and able to complete settlement, but the other party is unable to complete settlement as scheduled.
This means that if our contract specifies a closing date of November 10, the contract generally allows the delaying party until November 17 to complete settlement and closing, provided the requirements of the delay provision are satisfied.
Neither party needs the other's consent to use this contractual 7-day delay provision.
However, the delaying party must provide as much notice as possible to the other party and the closing attorney.
If the delaying party fails to complete settlement and closing within those seven calendar days, they are in breach of contract, and the non-delaying party may have the right to terminate and pursue the remedies available under the contract.
The contract doesn't automatically become void on the eighth day. The non-delaying party must exercise their rights.
Why Does This Matter?
Because moving isn't always simple!
You may have movers scheduled, utilities being transferred, a new home purchase underway, or travel plans that depend on closing occurring as expected.
Although everyone should make every effort to close on the agreed-upon date, unexpected delays can occur.
My advice is to plan around the contractual closing date while understanding that the agreement allows for this potential seven-day delay.
And if we learn that closing may be delayed, communication is critical.
The sooner everyone knows, the easier it is to make alternative arrangements.
A good closing date isn't just about getting to the finish line. It's about making sure the timing works for your life and understanding what flexibility the contract allows.
8. Type of Financing: Is Cash Really King?
We've all heard the saying:
Cash is king!
And yes, cash offers can be very appealing.
Without a mortgage lender involved, there may be fewer steps, less paperwork, and potentially a faster closing.
But does that automatically make a cash offer better?
Not necessarily.
Let's say we receive two offers.
One buyer is offering $485,000 in cash.
Another buyer is offering $500,000 with conventional financing.
If the higher price is well supported by comparable sales, the buyer is financially qualified, and the financing terms are reasonable, I may recommend giving serious consideration to the financed offer.
After all, once the transaction closes, the lender's money is just as good as the buyer's cash.
Cash is cash!
The real question is whether the additional money justifies any added financing risk or time.
Conventional Financing
Conventional mortgages are a common financing option.
Depending on the buyer's financial position, the lender may require a traditional appraisal, use an alternative valuation method, or offer an appraisal waiver.
If the contract price is supported by market data, appraisal concerns may be relatively limited, although no appraisal outcome is guaranteed.
We'll also want to review the buyer's preapproval and any information available about their financial qualifications.
FHA, VA, and USDA Financing
These loan programs can provide excellent opportunities for qualified buyers.
However, they may introduce additional requirements that sellers need to understand.
FHA and VA loans have property condition standards, and USDA financing can have additional eligibility and property requirements.
Appraisers may identify issues such as peeling paint, safety hazards, missing handrails, moisture concerns, or other conditions that require attention before the loan can close.
Here's where an experienced agent can help.
If I know that your property has visible conditions that could raise concerns with a particular loan program, we'll discuss those risks before accepting the offer.
That doesn't mean we should automatically rule out a buyer using FHA, VA, or USDA financing.
It simply means we want to understand what may be required.
And remember, these loan programs aren't necessarily limited to first-time buyers or buyers with minimal financial resources.
Every borrower and transaction is different.
What Happens If the Home Doesn't Appraise?
This is another question sellers frequently ask.
Let's say we accept an offer for $500,000, but the lender's appraisal comes back at $485,000.
Now what?
First, don't panic.
There are several possible ways to address the situation.
Option 1: The Buyer Requests a Price Reduction
The buyer may ask the seller to reduce the purchase price to the appraised value.
The seller isn't automatically required to agree.
But we need to understand whether the buyer can obtain financing at the original price.
Option 2: We Challenge the Appraisal
If the appraisal appears to contain factual errors or overlooks relevant comparable sales, we may be able to work through the lender's reconsideration-of-value process.
Appraisers are trained professionals who evaluate properties using established appraisal methods.
While real estate agents also analyze comparable sales, our pricing recommendations are not formal appraisals.
An appraiser may reconsider a valuation when presented with relevant new information, but a higher value is never guaranteed.
Option 3: We Meet Somewhere in the Middle
Sometimes the best solution is a compromise.
Perhaps the seller agrees to reduce the price slightly while the buyer contributes additional cash to cover the difference.
This depends on the buyer's available funds, financing requirements, and willingness to proceed.
And sometimes the parties simply cannot reach an agreement.
Special Considerations for FHA and VA Loans
FHA and VA financing may include appraisal-related protections that allow buyers to terminate without forfeiting earnest money if the property doesn't meet the applicable appraisal requirements.
These protections can continue beyond the normal due diligence period.
However, that doesn't automatically mean the due diligence fee is refundable.
North Carolina's contract provisions and the specific financing addendum must be reviewed carefully.
This is an important distinction when evaluating an offer.
What About Multiple Offers?
Now, this is a problem every seller hopes to have!
During the COVID-era market, multiple offers became a regular part of our business. I spent a lot of time organizing offers into spreadsheets so sellers could compare everything side by side.
Purchase price, due diligence fee, earnest money, financing, closing date, appraisal provisions, concessions... it all mattered.
Sometimes the highest offer wasn't the strongest offer.
A slightly lower offer with better financial terms, a shorter due diligence period, or fewer uncertainties might have been the better choice.
During that market, buyers were sometimes willing to offer substantial amounts above asking price or include additional protections for sellers.
Today's market can be very different.
Even when we receive multiple offers, buyers may be less willing or able to offer significantly above the asking price.
And that's okay.
Our strategy should reflect the market we're actually operating in, not the market we remember from several years ago.
Let's Talk About Negotiation
Here's my philosophy:
Negotiation should be respectful, thoughtful, and supported by data.
I'm not interested in creating unnecessary conflict or turning a transaction into a battle of egos.
Remember, there's another human being on the other side of this transaction.
They have goals, concerns, and financial limitations, just as you do.
My goal is to understand what matters most to you and help negotiate the strongest overall terms we reasonably can.
Sometimes that means pushing for a higher purchase price.
Other times, we may be better served negotiating a larger due diligence fee, a shorter due diligence period, or a more convenient closing date.
And occasionally, the buyer may have reached their maximum purchase price.
That's when creativity becomes important.
When We've Reached Your Bottom Line
There are times when a seller is motivated to move forward but has reached the lowest price they're willing to accept.
If the buyer can't increase their offer, we may explore other contractual terms that help protect the seller.
For example, we might propose an agreement that the buyer will purchase the property in its current condition and will not request additional repairs or concessions following inspections.
An appropriately drafted provision can establish those expectations from the beginning.
However, the buyer may still retain due diligence termination rights unless the contract is validly modified, and any additional provisions should be reviewed and prepared appropriately.
A clear understanding of expectations can sometimes reduce the likelihood of another round of negotiations.
It doesn't eliminate every risk, but it may provide a useful path forward.
Should You Accept the First Offer?
Here's something I've observed throughout my real estate career.
Sometimes the first offer turns out to be the best offer.
Not always, of course!
But early offers may come from buyers who have already been watching the market and recognize your home's value.
As a property sits on the market longer, buyers may begin to wonder why it hasn't sold.
And in a slowing market, the terms offered later may become less favorable.
That doesn't mean you should accept an offer simply because it's the first one.
It means we should evaluate every serious offer carefully rather than assuming something better will automatically come along.
There's no guarantee the next buyer will offer more money or better terms.
At the End of the Day, It's Your Decision
When an offer arrives, I'll review it with you, explain the terms, discuss the strengths and potential risks, and help you understand your options.
We'll talk about your motivation, your financial goals, your timeline, and what matters most to you.
I'll share my recommendations.
And if we're negotiating, I'll work to represent your interests professionally and respectfully.
But ultimately, it's your decision.
You never have to accept an offer simply because someone has made one.
And once you do accept an offer, we'll work toward a successful closing with the understanding that the buyer has certain contractual rights along the way.
The best offer isn't always the highest offer. It's the offer that provides the best combination of price, terms, certainty, and timing for your particular situation.
So yes, getting an offer is exciting!
But negotiating the right offer?
That's where the experience really matters.
Thinking about selling your home in Asheville or Western North Carolina? I'd love to help you develop a strategy that reflects your goals, your timeline, and the realities of today's market.
Next in the Seller's Guide: North Carolina Due Diligence — A Seller's Perspective. We'll explore what happens after you accept an offer, how to navigate inspection requests, and why being under contract doesn't always mean you're finished negotiating.
- Selling Guide
