Offering to Purchase Real Estate

Once you find the home you want to buy, the next step is to write an offer – which is not as easy as it sounds. Your offer is the first step toward negotiating a sales contract with the seller. Since this is just the beginning of negotiations, you should put yourself in the seller’s shoes and imagine his or her reaction to everything you include. Your goal is to get what you want, and imagining the seller’s reactions will help you attain that goal.

The offer is much more complicated than simply coming up with a price and saying, "This is what I’ll pay."

In an offer to purchase real estate, you include not only the price you are willing to pay, but other details of the purchase as well. This includes how you intend to finance the home, your down payment, who pays what closing costs, what inspections are performed, timetables, whether personal property is included in the purchase, terms of cancellation, any repairs you want performed, which professional services will be used, when you get physical possession of the property, and how to settle disputes should they occur.

It is certainly much more involved with many legal issues at stake.

Buying a home is a major event for both the buyer and seller. It will affect your finances more than any other previous purchase or investment. The seller makes plans based on your offer that affect his finances, too. However, it is more important than just money. In the half-hour it takes to write an offer you are making decisions that affect how you live for the next several years, if not the rest of your life. The seller is going to review your offer carefully.

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In most purchase transactions there may be a slight challenge or two, but most things will go quite smoothly. However, you want to anticipate potential problems so that if something does go wrong, you can cancel the contract without penalty. These are called "contingencies" and you must be sure to include them when you offer to buy a home.

For example, some "move-up" buyers often agree to purchase a home before selling their previous home. Even if the home is already sold, it is probably a "pending sale" and has not closed. Therefore, you should make closing your own sale a condition of your offer. If you do not include this as a contingency, you may find yourself making two mortgage payments instead of one.

Other common contingencies might include: financing, inspections (wood destroying insects, radon, mold, etc.), review of neighborhood bylaws, appraisal, survey.....

 If you cancel a contract without having built-in conditions and contingencies, you could find yourself in breach of the contract.

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After you have come up with an offer price, the next step is to determine with your agent how large a deposit should be made. You want the "earnest money deposit" to be large enough to show the seller you are serious, but not so large you are placing significant funds at risk.  Some areas of the country actually ask for up to 10% of the purchase price as a deposit. 

As with practically everything in real estate, there are exceptions to this rule, too. During a hot market there may be multiple offers on the property that interests you. A large deposit may impress a seller enough so they will accept your offer instead of someone else’s, even when your unknown competitor is offering the same price or slightly higher.

Since large deposits do impress sellers, you may also find that by making a large deposit you can convince the seller to accept a lower offer.  Doug will know what amount is usual and customary.

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Your offer will include a closing date. This way both you and the seller can make plans for moving, and the seller can make plans for buying his or her next home.  Most transactions actually do close on the right date specified..... unless some unforeseen issue arises.

If you are renting and need to give a landlord notice that you are moving out, you should make the offer accordingly. 

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Your purchase offer will stipulate both the closing date and the date that the seller is to vacate the premises.  Possession usually ranges from the buyer obtaining the keys at the actual closing up to 30 days after the date of closing.  Sometimes a Seller may pay a "rent-back" to a Buyer if there is an extended stay in the home.  All of this should be negotiated up front in the contract terms.

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