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Make an Offer

The Basics of Making an Offer

A written proposal is the foundation of a real estate transaction. Oral promises are not legally enforceable when it comes to the sale of real estate. Therefore, you need to enter into a written contract, which starts with your written proposal. This proposal not only specifies price, but also all the terms and conditions of the purchase. For example, if the seller offered to help with $2,000 toward your closing costs, make sure that’s included in your written offer and in the final completed contract, or you won’t have grounds for collecting it later.

REALTORS® have standard purchase agreements and will help you put together a written, legally binding offer that reflects the price as well as terms and conditions that are right for you.  Debbie McBee will guide you through the offer, counteroffer, negotiating and closing processes.

If you are not working with a real estate agent, keep in mind that you must draw up a purchase offer or contract that conforms to state and local laws and that incorporates all of the key items. State laws vary, and certain provisions may be required in your area.

After the offer is drawn up and signed, it is usually presented to the seller by your real estate agent, by the seller’s real estate agent, if that’s a different agent.wyers.

What is in an Offer?

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). So it’s important that the purchase offer contains all the items that will serve as a “blueprint for the final sale.” The purchase offer includes items such as:

  • address and the legal description of the property
  • purchase price
  • terms: for example, all cash or subject to you 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, 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 payments are to be adjusted (prorated) between buyer and seller
  • provisions about who will pay for title insurance, survey, termite inspections, etc.
  • type of deed to be given
  • other requirements specific to your state, which might include a chance for an attorney to review the contract, disclosure of specific environmental hazards or other state-specific clauses
  • a provision that the buyer may make a final walkthrough inspection of the property just before the closing
  • a time limit after which the offer will expire
  • contingencies, which are an extremely important matter and that are discussed in detail below

Contingencies – “Subject to” Clauses

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. Here are two common contingencies contained in a purchase offer:

  • The buyer obtaining specific financingfrom 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: for example, “within 10 days after acceptance of the offer.” 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 explicitly stated in the written contract.

Negotiating Tips

You’re in a stronger bargaining position if:

  • you’re an all-cash buyer and have no financial contingency
  • you’re already have a preapproved mortgage and have no contingency to sell a current property before you can close
  • you’re able to close and take possession at a time that is especially convenient for the seller

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.” It is customary that the buyer’s brokerage hold the monies, which will be deposited upon receipt in the brokerage’s trust account.  This will be credited to your costs at closing.

Buyers: 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 – 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 counteroffer including the changes the seller prefers. You are then free to accept it, reject it, or even make your own counteroffer the seller’s counteroffer.

Each time either party makes any change in the terms, the other side is free to accept, reject, or counter again. The document becomes a binding contract only when one party notifies the other in writing an unconditional acceptance of the other side’s proposal.

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