subject: Making A Real Estate Offer [print this page] Making A Real Estate Offer Making A Real Estate Offer
Of all possible business transactions, the act of buying a home or property is laced with enough red tape to make anybody happy. Oral arguments are not sufficient; everything must be written down, with literally every "I" dotted and "t" crossed. If the seller is going to help with closing costs or arrange to have work done on the property as a condition of the purchase, it all has to be documented.
If you are working through a realtor, you don't have to worry, because part of their job is to assemble all of the pertinent paperwork for you. There are a number of standard forms, such as purchase agreements, that are used universally and kept up to date with changing real estate law.
If you are choosing to go it alone and handle the transaction yourself (not recommended, but some still do), you still need to assemble a purchase contract that complies with all state and local laws and covers all the proper items.
While this is not intended to be a catchall article, covering every law on the books in every state, there are a number of common denominators when it comes to purchase agreements and offers.
It needs to contain a physical address and legal description of the property in question, along with the sale price and stated terms and conditions surrounding the sale.
The seller will agree to provide a free and clear title, and a target date for closing the sale will be established. The amount of earnest money accompanying the offer, and whether it is in the form of cash, check, or certified funds will also be included. Keep in mind that you may lose earnest money if you back out of the purchase for no legitimate reason.
There will also need to be agreement and understanding over who will be responsible for home inspections, termite letters, insurance, execution of deed, etc.
Laws may vary from state to state on given issues, so make sure that all local and state provisions are accounted for and adhered to. This may require the assistance of an attorney to make sure everything is properly executed. The buyer should also request a last minute walk through on the property before closing.
Contingency situations should also be addressed, such as the buyer's ability to obtain financing and an all clear from the home inspector.
It is a no brainer that the buyer is in a much stronger bargaining position if they are a) paying cash for the property, b) already pre-approved for a mortgage loan, c) not bogged down by having to sell their house first, or d) preferably all of the above.
When you make your offer, be prepared to put down a substantial amount known as earnest money, a financial show of good faith on your part. It tells the seller that you are in fact serious about making this purchase.
Once the seller receives your offer, they can either accept it, reject it, or make you a counteroffer. If it is accepted, the contract becomes firm as soon as you are notified of that acceptance. Counteroffers come usually based on price, but may be made concerning closing date or other minor issues that relate to the deal (i.e. you want the refrigerator left with the property but the seller wants to take it with them to their new home).
Any time a change is made to the contract, from either side, a counteroffer must be made. The document is binding only after one party signs acceptance of the other's proposal.
Once the documents are signed, you're locked in, unless it is mutually agreed upon by both parties not to continue forward with the sale. Backing out after acceptance usually results in the loss of your earnest money, and may result in legal action being taken against you.
In today's economy, it is certainly a buyer's market. Home values are at all-time lows, and the number of homes sitting vacant is staggering. You stand to be able to get into a home for a very attractive price. Just make sure you do it right and take the time to construct a deal that is beneficial to you and your family.
