What the Offer Contains
The purchase offer you submit, if accepted as it stands, will become a binding sales contract (known in some areas as a purchase agreement, earnest money agreement, or deposit receipt.) It's important, therefore, that it contains all the items that will serve as a "blueprint for the final sale." These purchase offer items include such things as:
- Address (sometimes legal description) of the property
- Sale price
- Terms (all cash or subject to your obtaining a mortgage for a given amount)
- Seller's promise to provide clear title (ownership)
- Target date for closing (the actual sale)
- Amount of earnest money deposit accompanying the offer, and whether it's a check, cash or promissory note (and how it's to be returned to you if the offer is rejected, or kept as damages if you later back out for no good reason)
- Method by which real estate taxes, rents, fuel, water bills, and utilities are to be adjusted (prorated) between buyer and seller
- Provisions about who will pay for title insurance, survey, termite inspections and the like
- Type of deed to be given
- Other requirements specific to your state, which might include a chance for attorney review of the contract, disclosure of specific environmental hazards, or other state-specific clauses
- A provision that the buyer may make a last-minute walk-through inspection of the property just before the closing
- A time limit (preferably short) after which the offer will expire
- Contingencies, which are an extremely important matter (and discussed in detail below)
Contingencies
If your offer says "this offer is contingent upon (or subject to) a certain event," you're saying that you will only go through with the purchase if that event occurs.
The following are some common contingencies contained in a purchase offer:
- The buyer obtaining specific financing from a lending institution. If the loan can't be found, the buyer won't be bound by the contract.
- A satisfactory report by a home inspector "within 10 days after acceptance of the offer." For example, the seller must wait 10 days to see if the inspector submits a report that satisfies the buyer. If not, the contract would become void.
Again, make sure that all the details are nailed down in the written contract.
>> Next "Make an Offer" Topic: Negotiating Tips and More
Negotiating Tips
You're in a strong bargaining position (meaning, you look particularly welcome to a seller) if:
- You're an all-cash buyer.
- You're already pre-approved for a mortgage.
- You don't have a present house that has to be sold before you can afford to buy.
In those circumstances, you may be able to negotiate some discount from the listed price. On the other hand, in a "hot" seller's market, if the perfect house comes on the market, you may want to offer the list price (or more) to beat out other early offers.
It's very helpful to find out why the house is being sold and whether the seller is under pressure. Keep these considerations in mind:
- Every month a vacant house remains unsold represents considerable extra expense for the seller
- If the sellers are divorcing, they may just want out quickly
- Estate sales often yield a bargain in return for a prompt deal
Earnest Money
This is a deposit that you give when making an offer on a house. A seller is understandably suspicious of a written offer that is not accompanied by a cash deposit to show "good faith." A REALTOR® or an attorney usually holds the deposit, the amount of which varies from community to community. This will become part of your down payment.
The Seller's Response to Your Offer
You will have a binding contract if the seller, upon receiving your written offer, signs an acceptance, just as it stands, unconditionally. The offer becomes a firm contract as soon as you are notified of acceptance.
If the offer is rejected, that's that, and the sellers could not later change their minds and hold you to it.
If the seller likes everything except the sale price, or the proposed closing date, or the basement pool table you want left with the property, you may receive a written counter-offer, with the changes the seller prefers. You are then free to accept or reject it or to even make your own counter-offer. For example, "We accept the counter-offer with the higher price, except that we still insist on having the pool table."
Each time either party makes any change in the terms, the other side is free to accept or reject it, or counter again. The document becomes a binding contract only when one party finally signs an unconditional acceptance of the other side's proposal.
Withdrawing an Offer
Can you take back an offer? In most cases the answer is yes, right up until the moment it is accepted, or even, in some cases, if you haven't yet been notified of acceptance. If you do want to revoke your offer, be sure to do so only after consulting a lawyer who is experienced in real estate matters. You don't want to lose your earnest money deposit, or find yourself being sued for damages the seller may have suffered by relying on your actions.
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This data last updated on 2024-10-02 18:08:57.
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