The Basics of Making an Offer
Once you find a property you like enough to buy, you must put in an offer. This is a written proposal to buy and includes all of the terms and conditions which you and the seller must abide by.
Real estate agents have standard contracts they use for all home purchases. They will help you create your offer with terms that are specific to your situation. This document will follow all state regulations and any conditions that protect you in the purchase.
You will sit down with your agent to create the details of the offer and sign it. Your agent will present it to the seller’s agent and seller, who may agree to it, submit a counteroffer or refuse it outright.
Aspects of the Offer
Several basic components make up the offer and are simply filled in. They include the following:
- Address and legal description of the purchase property
- Sale price
- Type of deed
- Seller’s obligation to provide a clear title
- Closing date
- Financing or payment terms, including type of loan
- Amount of money being received from buyer and held in earnest
- Method for payment of taxes and other bills for the property
- Provisions for who is responsible for costs of closing the property, such as inspections
- Allowance for a walkthrough
- Time limit for expiration of contract
Your agent will guide you in these answers, but the final decision on certain aspects is up to you, such as the closing date.
Need for Contingencies
An offer often includes contingencies that allow for unforeseen problems. These contingencies protect the buyer from losing their escrow money or being locked into a contract that is a disadvantage for them.
Two Common Contingencies
- Financing – the buyer must be able to obtain financing or the contract is null
- Inspection – the home must return a satisfactory inspection of the buyer can cancel the contract
Negotiating a Strong Offer
You will often hear about a buyer’s or seller’s market, which means that person has a stronger position in negotiating a contact. To help you as a buyer have more power in the negotiations, you should do the following:
- Be pre-approved for financing
- Be able to put in a higher amount of money for escrow
- Be willing to close at a time that’s convenient for the seller
When you have these points in your favor, you can often ask for other items in the offer.
Understanding Earnest Money
Earnest money are funds that you provide at the time of the offer. It shows you are serious about buying the property. The money is held in an escrow account by the title company until closing once the seller accepts your offer.
After the Offer is Made
Once you make an offer, the seller has time to think about their decision. They have several choices, which impact the buyer. The buyer should understand what comes next, so they can be prepared.
The Seller Accepts
Once the seller accepts, the offer becomes a contract and moves into the next steps, including an inspection.
The Seller Submits a Counteroffer
The seller may choose to change some terms in the offer. The buyer may either accept, reject or submit another counteroffer.
The Seller Rejects
If the seller rejects an offer, the buyer must move on and look for another property.
The buyer can also withdraw the offer until it is accepted. They can also void the contract if certain conditions aren’t met. However, these allowances are very strict and specific, so the buyer needs to be certain of their decision before submitting an offer.
How the Agent Assists
A real estate agent is important in this part of the home-buying process because they can guide the buyer to make a solid offer and increase the chances of acceptance. It becomes especially imperative when a seller receives multiple offers.
As the saying goes, you never get a second chance to make a first impression. Buyers can’t guarantee they will have another chance to put in an offer if their first one is refused. An agent can guide them in creating a winning offer even though they won’t know if it’s the only one or one of several.
Submitting an offer is one of the most important parts of the buying process. Make sure you know what you want in your offer and listen to your agent’s advice to ensure you create a positive impression for the seller. Do it right and you’ll hear your agent tell you, “you’re under contract” and one step closer to being a homeowner.