You’ve checked out schools, neighborhoods, restaurants, parks, and communities, sifted through more online listings than you can shake a stick at, and you’ve doubtless walked through more prospective homes than you can count while looking for … THE ONE.
And after all of that, lo and behold, you’ve found it! THE house. The one you’d like to buy, the one where you want to build your life. Congratulations!
We know you’re brimming with excitement–finding THE house is a great feeling–but now it’s time to think about making an offer to buy it … and that’s not as simple as you might think. Before you start filling out forms and signing things, make sure you know what’s needed, that you know the documents required, and that you’re ready to make a *realistic* offer to purchase the house.
Something to think about: if, by the this time, you’ve not started working with a REALTOR, it’s something you should really think about. REALTORS are generally experts with respect to the home prices in the neighborhoods where they work. They’ll be able to counsel you & make sure you’re offering enough money, but not too much or too little for the home. A REALTOR will know the laws of the area where you’re looking to buy, what paperwork and forms are needed, what sorts of deadlines and requirements there are, and, most importantly, a REALTOR will be your advocate; they are able to remove emotion from the situation–they have no “skin” in the game–so they will be able to negotiate on your behalf while maintaining a level head (you’d be surprised how easy it is to lose your cool when you’re dealing with YOUR home).
Another SUPER important thing: If you’ve not talked with a lender before finding the house, that’s the first thing you should do.
Getting pre-approved for a loan will go a long way toward putting you in position to get the home you want. It’ll give you peace of mind about being able to afford it, and pre-approval will also give you more than a fair amount of leverage when it comes to writing an offer to purchase the house you want. When sellers look at an offer that says, without question, that you are able to buy the house and have the money to do it, they’ll be more inclined to accept the offer.
The offer you prepare and submit, if accepted as you (or you and your REALTOR), will become a binding sales contract. Accordingly, it’s important you ensure it contains all the items that will serve as a “blueprint for the final sale.” These include, but are not limited to, such things as:
- Address (and sometimes a legal description) of the property
- Sale price (this is the amount you’re offering to pay)
- Terms: for example, all cash or subject to your obtaining a mortgage for a given amount (remember what we said about getting pre-approved for a loan!)
- Seller’s promise to provide clear title (ownership)
- Target date for closing/escrow/settlement (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–and in what period of time–if the offer is rejected–or kept as damages if you later back out of the offer for no good reason (a reason not provided for in the offer).
- Method by which real estate taxes, rents, fuel, water bills and utilities are to be adjusted (prorated) between buyer and seller (the title/settlement company you use will give you information about this).
- Provisions about who will pay for title insurance, survey, termite inspections, other home inspections, and so on.
- Type of deed to be given.
- Other documents and addenda specific to where you’re making your offer, 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 can make a last-minute walk-through inspection of the property just before the closing (this typically happens on the day of or the day prior to closing).
- A time limit (preferably short) after which the offer will expire.
- Contingencies (which we’ll discuss in greater detail below).
If your offer says “this offer is contingent on ___________,” you’re saying that you will only go through with the purchase if that thing happens. Contingencies can include things like selling your current home (so you’re able to afford the new one), your financing getting funded as outlined in the offer, an acceptable home inspection, or other such things.
Accepted or … Not So Much?
If the seller of the home you want accepts your offer unconditionally, you will have a binding contract. As soon as you’re notified that (either by the seller’s agent or the seller himself) that the offer has been accepted, you have a binding contract. If they reject it outright, the offer is, likewise, considered immediately null and void.
Sooo … what about a counter-offer?
Sure! A counter-offer is pretty common. Many times, sellers will request to change a couple of small things, or maybe a big thing. The seller might ask for a higher purchase price, might strike down your contingencies, change the closing date, or other such things. Once that happens, you can review the proposed changes and either accept or reject them … or you can even make changes yourself. Each time either party makes any change in the terms, the other side is free to accept or reject it, or make another counter-offer. The document becomes a binding contract only when one party finally signs and makes unconditional acceptance of the other side’s proposal.
What If You Change Your Mind? Can you withdraw the offer?
In most cases, you’re can withdraw your offer, but there are conditions (there are always conditions, right?) If you withdraw before the offer’s been accepted, there should be no problem. Once it’s a binding contract, however, it’s best to consult with a real estate lawyer or your REALTOR (those folks come in handy, like we said), so you know what the fallout from withdrawing might be. Consequences could mean anything from losing your earnest money deposit to being sued for breach of contract (no one wants that).
When it comes to making an offer to buy the home of your dreams (or any other home) it’s important to make sure you have all your ducks in a row. We can’t emphasize enough how beneficial it is to work with a REALTOR; they’ll make everything is “just so” and make sure you’re positioned properly.
Congratulations! You’re one step closer to crossing the threshold to the home of your dreams. Good luck!