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OFFER LETTER: PAYMENT TERMS

  • karen36083
  • 14 minutes ago
  • 2 min read

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In last Friday’s post, we covered straightforward payment terms. But what happens when the purchase involves multiple steps—say, three or more staggered payments?


A classic example is when a buyer uses a bank loan to fund the purchase. This is where many deals start to wobble.


Why Sellers Often Reject Bank Financing

For many sellers, bank-financed deals sound risky. And in a way, they’re right—it usually takes 3–4 months before they receive the final balance.


The biggest sticking point?

They’re asked to sign the Deed of Absolute Sale and hand over the title before they get fully paid.


Understandably, this feels counterintuitive. But here’s the logic:

Banks require the buyer to own the property first (title under their name) so it can be used as collateral. Only after this step will the bank release the loan proceeds to the seller.


Where Miscommunication Happens

Some brokers simply write:


“Balance to be paid via bank loan.”


That’s it. No explanation.


So sellers agree… until they realize they’re surrendering the title without seeing the full payment yet. Cue deal collapse.


My Approach: Spell It Out

I prefer to break down exactly when the seller will receive money, tied to clear milestones.


Example:


Earnest Money – Amount of XXX, payable upon the Seller’s acceptance of this offer and after delivering the documents listed in Item “Deliverables.”


Equity Portion – Amount of XXX, payable upon execution of the Deed of Absolute Sale and turnover of the Title, no later than XX calendar days after the Earnest Money payment.


Final Balance – Amount of XXX, payable by the Buyer’s Bank via Manager’s Check to the Seller upon transfer of Title and Tax Dec to the Buyer’s name.


Pro Tip:

Use a clear template:


Payment upon [event/milestone] on or before [estimated time from last payment].


Notice the subtle cues—“turnover of the title” and “upon transfer of the Title and Tax Dec”—which prepare sellers for the less intuitive parts of the process. Educated sellers = fewer surprises = smoother closings.


If you’re unsure how long a payment will take, it’s best to be extremely conservative—especially when dealing with the government.


To be continued…

© 2024 by JUAN PATAG REAL ESTATE

RE/MAX Capital, 5th Floor, Phinma Plaza

Plaza Drive, Rockwell Center, Makati City

Metro Manila, Philippines

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