Sell My House Home Selling Smarts 4 — Questions and Answers
Question 1: What happens if a home appraises BELOW the agreed sale price?
- The sale automatically closes at the appraised value
- The buyer must always pay the full contract price in cash
- The buyer, seller, or both must renegotiate or the deal may fall through (Correct answer)
- The lender automatically increases the loan to cover the gap
Correct answer: The buyer, seller, or both must renegotiate or the deal may fall through
An appraisal gap means the lender won't fund the full amount, so the parties must renegotiate the price, the buyer covers the gap in cash, or the contract is cancelled.
Question 2: What is 'net proceeds' from a home sale?
- The total sale price before any deductions
- The amount the seller receives after paying off the mortgage, commissions, and closing costs (Correct answer)
- The profit above the original purchase price only
- The buyer's down payment amount
Correct answer: The amount the seller receives after paying off the mortgage, commissions, and closing costs
Net proceeds is the actual cash the seller walks away with after subtracting the mortgage payoff, agent commissions, closing costs, and any other fees.
Question 3: Which factor most directly determines whether a seller's market or buyer's market exists?
- The season of the year
- The ratio of available homes for sale (supply) to buyer demand (Correct answer)
- Interest rates alone
- The average home price in the area
Correct answer: The ratio of available homes for sale (supply) to buyer demand
The balance of supply (inventory) versus demand (buyers) is the primary driver — low inventory with high demand creates a seller's market, and vice versa.
Question 4: What is a 'kick-out clause' in a real estate contract?
- A provision allowing buyers to back out without penalty
- A seller's right to continue marketing and accept a better offer if the buyer's home doesn't sell in time (Correct answer)
- A buyer's ability to remove inspection contingencies
- A lender's right to cancel loan approval
Correct answer: A seller's right to continue marketing and accept a better offer if the buyer's home doesn't sell in time
A kick-out clause lets sellers accept a contingent offer while still marketing the home, and if a better offer comes, the original buyer gets a set time to remove their contingency or lose the deal.
Question 5: What is the primary advantage of accepting an all-cash offer over a financed offer, even if the cash offer is lower?
- Cash buyers always pay higher prices
- No appraisal required and no lender financing contingency, reducing risk of the deal falling through (Correct answer)
- Cash buyers waive all inspection rights
- Sellers pay no closing costs on cash deals
Correct answer: No appraisal required and no lender financing contingency, reducing risk of the deal falling through
Cash offers eliminate appraisal risk and financing contingencies, resulting in a faster, more certain closing with fewer ways the deal can collapse.
Question 6: Under the IRS Section 121 exclusion, how much profit can a married couple exclude from capital gains tax when selling their primary residence (as of 2024)?
- $100,000
- $250,000
- $500,000 (Correct answer)
- $750,000
Correct answer: $500,000
Married couples filing jointly can exclude up to $500,000 in capital gains from the sale of a primary residence they've owned and lived in for 2 of the last 5 years.
Question 7: What does 'time is of the essence' mean in a real estate contract?
- The seller must accept an offer within 24 hours
- All deadlines in the contract are strict and missing them can void the agreement or trigger penalties (Correct answer)
- The buyer must close within 7 days
- Price negotiations must conclude by the listing expiration date
Correct answer: All deadlines in the contract are strict and missing them can void the agreement or trigger penalties
This legal phrase means all dates and deadlines specified in the contract are binding, and failure to meet them could constitute a breach of contract.
Sell My House Home Selling Smarts 4
What happens if a home appraises BELOW the agreed sale price?