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The Offer
The offer is a written purchase proposal. In some states,
if a seller accepts your offer the signed proposal becomes
a purchase contract. In other areas, your agent or your settlement
attorney will prepare a real estate purchase contract with
all of the same terms that you and the seller agreed to in
the offer. Once the offer is signed by the buyer and seller,
you have a binding contract even if the final purchase contract
has not been written. If you back out of the contract, you
can lose your earnest money and you could be sued by the seller.
The offer should include:
* The price;
* The amount of earnest money or good faith money you will
put down and who will hold the money during the escrow period.
* The legal names of all of the buyers and seller.
* The address and exact legal description of the house;
* The closing date;
* Any other important dates, such as the date by which the
inspection must be done;
* How you intend to pay for the property. If a loan is involved,
the contract is usually contingent on the bank approving the
loan. If the bank will not lend you the money you get your
earnest money back;
* A list of any property you expect the seller to leave in
the house, such as carpet, appliances, hanging lamps, draperies;
* All contingencies;
* A breakdown of who is paying the closing, title, loan, and
escrow expenses and the cost of any required inspections
Contingencies
Contingencies are events that must happen before you or the
seller can complete the purchase. If the contingencies are
not satisfactorily taken care of before the closing, the sale
is cancelled and you get your earnest money back. You should
use contingencies to protect you when necessary, but if you
put too many contingencies in an offer the sellers will think
you are just wasting their time with an offer that will never
close. Use contingencies wisely.
Typical contingencies are:
Getting a mortgage loan at a specific amount and rate.
To make this more acceptable to the seller, you may show your
prequalification letter, agree to make a formal loan application
within five days, and agree that the seller can cancel the
contract if you do not have a loan approval letter within
30 to 45 days.
Selling your present home. Very few sellers will take
their houses off the market with this contingency unless you
already have a signed contract on your house and can show
it to them.
Seller buying another home. You don't want to make
a loan application, pay fees, get an appraisal, etc. only
to find that the sellers couldn't find any houses they like.
You will want to know that they already have a purchase contract
to buy a house. If they do not, you can make this a two-week
contingency. The seller has two weeks to find a home or cancel
the sale. You can wait until the two weeks are up to apply
for your loan.
Moving into the property before the closing date. You
would probably agree to pay rent until closing, and agree
not to ask the seller to pay for any repairs after you move
in.
Seller continuing to live in the property after the closing
date. The seller should pay you rent equal to the amount
of your mortgage and be responsible for all repairs until
he or she moves out.
Home inspection that indicates no major problems. It
is not usual for the seller to agree in the contract to pay
for all repairs noted by the home inspector. That would be
like writing a blank check to the buyer. If you expect that
there will be repairs needed, you may ask the seller to agree
to pay up to a set amount of money for repairs.
Clean termite report. The seller should pay for a termite
inspection. The offer usually requires the seller to pay the
cost of any necessary treatment.
Negotiating
It is common to bargain with the seller about the price of
the house. A seller could accept your first offer, or the
process of offer and counteroffer could go back and forth
several times. If you are working with an agent, he or she
will present your offer to the seller and listing agent and
try to convince the seller to accept it. If there is a counteroffer,
your agent will bring it back to you in writing and discuss
it with you.
The seller could reject your offer without making a counteroffer.
If the seller turns the offer down completely, you have the
right to submit a new offer that you hope will be more acceptable.
Even if you offer full price, the seller has the right to
turn your offer down but not to violate federal fair housing
laws by refusing to sell to you because of your age, sex,
race, religion, or national origin. If you suspect your
offer was not accepted for one of these reasons, you should
contact your state's attorney general to find out how to register
a discrimination complaint.
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