Verbal promises are not legally enforceable when it comes to the sale of real estate. Therefore, you need to enter into a written contract that conforms to all state and local laws. This proposal not only specifies price, but all of the terms and conditions of the purchase.
We use a variety of standard forms (including Residential Offer to Purchase agreements) that have been utilized thousands of times and are kept up-to-date with the changing laws. When you use our Bear Agents, these forms will be available to you. In addition, our agents are there to offer assistance to the buyer and cover the questions that need to be answered during the process. If you are working with your agent as a buyer’s agent, they will offer you advice on what price to offer and how to structure the offer to your best advantage. After the offer is drawn up and signed, it will be presented to the seller by either your agent or the seller’s agent.
What the Offer Contains
The offer to purchase you submit, if accepted as it stands, will become a binding sales contract. It’s important, therefore, that it contains all the items that will serve as a blueprint for the final sale. These offer to purchase items include such things as:
- Address of the property (sometimes legal description)
- Sale price
- Terms (is this a cash transaction or will it be subject to obtaining a mortgage for a given amount)
- Seller’s promise to provide clear title (ownership)
- Target date for closing
- Amount of earnest money deposit accompanying the offer or when it will be paid, and whether it’s a check, cash or promissory note (and how it’s to be returned to you if the offer is rejected, or kept as damages if you later back out for no good reason)
- Method by which real estate taxes, rent, fuel, water bills, and utilities are to be adjusted (prorated) between buyer and seller
- Provisions about who will pay for title insurance, survey, well, water and septic inspection, termite inspections and the like
- Type of deed to be given
- Other requirements, which might include a chance for attorney review of the contract, disclosure of specific environmental hazards, or other clauses specific to this transaction
- A provision that the buyer will have a final walk-through inspection of the property just before the closing
- A time limit after which the offer will expire
- Contingencies, which are an extremely important matter
If your offer says, “This offer is contingent upon (or subject to) a certain event,” you’re saying that you will only go through with the purchase if that event occurs. The following are some common contingencies contained in an offer to purchase:
- The buyer obtaining specific financing from a lending institution. If the loan can’t be obtained, the buyer won’t be bound by the contract.
- A satisfactory report by a home inspector within a specified time frame (for example: 10 days) after acceptance of the offer.
- The sale of your current home. (if you need to sell your home to be able to purchase another home).
Your Bear Agent will be there to make sure that all the details are nailed down in written contract.
You’re in a strong bargaining position if:
- You’re a cash buyer
- You’re already pre-qualified for a mortgage.
- You don’t have a present house that has to be sold before you can afford to buy.
- A combination of the above two is the best scenario
In those circumstances, you may be able to negotiate some discount from the listed price. On the other hand, in a “hot” seller’s market, if the perfect house comes on the market, you may want to offer the list price or more to beat out other offers.
It’s very helpful to find out why the house is being sold and whether the seller is under pressure. Keep these considerations in mind:
- Every month a vacant house remains unsold represents considerable extra expense for the seller.
- If the sellers are divorcing, they may just want out quickly.
- Estate sales often yield a bargain in return for a prompt deal.
- Earnest Money: This is a deposit that you give when making an offer on a house. A seller is understandably suspicious of a written offer that is not accompanied by a cash deposit to show “good faith”. The seller’s listing office usually holds the deposit, and the amount varies from transaction to transaction. This deposit will become part of your down payment upon closing the sale. Keep in mind, the more earnest money you put down, the more serious the seller will take your offer.
The Seller’s Response to Your Offer
You will have a binding contract if the seller, upon receiving your written offer, signs an acceptance just as it stands, unconditionally. The offer becomes a firm contract as soon as you are notified of acceptance. If the offer is rejected, it’s null and void, and the sellers cannot later change their minds and hold you to it.
If the seller likes everything except the sale price, the proposed closing date, the basement pool table you want left with the property or any other terms in the offer, you may receive a written counteroffer with the changes the seller prefers. You are then free to accept, reject it or even to make your own counteroffer.
Each time either party makes any change in the terms, the other side is free to accept or reject it, or counter again. The document becomes a binding contract only when one party finally signs an unconditional acceptance of the other side’s proposal.
Withdrawing an Offer
Can you take back an offer? In most cases the answer is yes, right up until the moment it is accepted, or even, in some cases, if you haven’t yet been notified of acceptance. If you do want to revoke your offer, be sure to do so only after consulting a lawyer who is experienced in real estate matters. You don’t want to lose your earnest money deposit, or find yourself being sued for damages the seller may have suffered by relying on your actions.