Dear Heather

I have verbally accepted an offer on my house, so it’s finally sold, right?

Enthusiastic

Devonshire

Dear Enthusiastic

Great news on receiving an offer at a price point you think you can work with; however, you still have a long way to go before your agent can put a SOLD sign on your property! So allow your agent to keep marketing it for you and keep showing it, just in case.

Your verbal offer is ‘subject to contract’. In order for an offer to be binding there must be a written contract signed by all parties. In the case of real estate a 10 percent deposit must accompany that contract and it must be stamped with the appropriate government stamps in order for it to be valid.

There may be all sorts of ‘conditions’ in that contract, i.e. subject to financing — the most common — subject to an alien license, subject to a boundary survey, structural survey, vacant possession, to name but a few.

Unfortunately, anyone can throw out an offer. Usually it is up to your real estate agent to review the financial side of things with a buyer before they even show them a house, to ensure they were qualified to make a purchase of this magnitude. The buyer should have a letter from their financial institution to indicate that they are ‘preapproved’, but even if they are, sometimes it all comes down to the appraisal.

In order for the bank to lend money, they will need to do an appraisal on the property which the purchaser pays for. When the appraisal is completed it will be scrutinised by the bank and may or may not be accepted depending on a number of criteria. Typically they will only lend between 65 percent and 75 percent of that value or the offer, whichever is the lesser. So if the appraisal comes in lower, your buyer may not be able to afford your property, or you might find yourself back at the negotiating table, as future buyers are likely to be in the same position.

Remember to keep an open mind. You may not receive quite as much as you had hoped for your property in the end. However, the one you will be buying next most likely won’t cost as much as you think either.

Happy house hunting!

Heather Chilvers is among Coldwell Banker Bermuda Realty’s leading sales representatives. She has been working in real estate for 25 years. If you have a question for Heather, please contact her at hchilvers@brcl.bm or 332 1793. She will respond confidentially.