A written proposal is the foundation of a real estate transaction
Oral promises are not legally enforceable when it comes to
the sale of real estate. Therefore, you need to enter into a written contract,
which starts with your written proposal. This proposal not only specifies
price, but all the terms and conditions of the purchase. For example, if the
sellers said they'd help with $2,000 toward your closing costs, be sure that's
included in your written offer and in the final completed contract, or you
won't have grounds for collecting it later.
REALTORS® usually have a variety of standard forms
(including Residential Purchase Agreements) that are kept up to date with the
When you use a REALTOR® these forms will be available to you. In
addition, REALTORS® cover the questions that need to be answered during the
process. In many states certain disclosure laws must be complied with by the
seller, and the REALTOR® will ensure that this takes place.
If you are not
working with a REALTOR®, keep in mind that you must draw up a purchase offer or
contract that conforms to state and local laws and that incorporates all of the
key items. State laws vary, and certain provisions may be required in your
After the offer is drawn up and signed, it will usually be
presented to the seller by your REALTOR®, by the seller's REALTOR® if that's a
different agent, or often by the two together. In a few areas, sales contracts
are typically drawn up by the parties' lawyers. What the offer contains
The purchase offer you submit, if accepted as it stands,
will become a binding sales contract (known in some areas as a purchase
agreement, earnest money agreement or deposit receipt). It's important,
therefore, that it contains all the items that will serve as a "blueprint
for the final sale." These purchase offer items include such things as:
and sometimes a legal description of the property
-- for example, all cash or subject to your obtaining a mortgage for a
promise to provide clear title (ownership)
date for closing (the actual sale)
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 if the offer
is rejected -- or kept as damages if you later back out for no good reason
by which real estate taxes, rents, fuel, water bills and utilities are to
be adjusted (prorated) between buyer and seller
about who will pay for title insurance, survey, termite inspections and
of deed to be given
requirements specific to your state, which might include a chance for
attorney review of the contract, disclosure of specific environmental
hazards or other state-specific clauses
provision that the buyer may make a last-minute walk-through inspection of
the property just before the closing
time limit (preferably short) after which the offer will expire
which are an extremely important matter and discussed in detail below
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 two common
contingencies contained in a purchase order:
buyer obtaining specific financing from a lending institution. If the loan
can't be found, the buyer won't be bound by the contract.
satisfactory report by a home inspector "within 10 days (for example)
after acceptance of the offer." The seller must wait 10 days to see
if the inspector submits a report that satisfies you. If not, the contract
would become void. Again, make sure that all the details are nailed down
in the written contract.
You're in a strong bargaining position -- meaning, you
look particularly welcome to a seller -- if:
an all-cash buyer; or
already pre-approved for a mortgage; and
don't have a present house that has to be sold before you can afford to
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 early 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:
month a vacant house remains unsold represents considerable extra expense
for the seller;
the sellers are divorcing, they may just want out quickly; and
sales often yield a bargain in return for a prompt deal.
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." A REALTOR® or an
attorney usually holds the deposit, the amount of which varies from community
to community. This will become part of your down payment.
Buyers: the seller's response to your
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, that's that, and the sellers could not later change
their minds and hold you to it.
If the seller likes everything except the sale price, or
the proposed closing date, or the basement pool table you want left with the
property, you may receive a written counteroffer, with the changes the seller
prefers. You are then free to accept or reject it or to even make your own
counteroffer. For example, "We accept the counteroffer with the higher
price, except that we still insist on having the pool table."
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.
For sellers: calculating your net
When an offer comes in, you can accept it exactly as it
stands, refuse it (seldom a useful response), or make a counteroffer to the
buyers with the changes you want. In evaluating a purchase offer, you should
estimate the amount of cash you'll walk away with when the transaction is
complete. For example, when you're presented with two offers at once, you may
discover you're better off accepting the one with the lower sale price if the
other asks you to pay points to the buyer's lending institution. Once you have
a specific proposal before you, calculating net proceeds becomes simple. From
the proposed purchase price you can subtract:
amount on present mortgage;
other liens (equity loan, judgments);
costs of selling (attorney, escrow agent);
property taxes and water bills;
required by the contract: cost of survey, termite inspection, buyer's
closing costs, repairs, etc.
Your present mortgage lender may maintain an escrow
account into which you deposit money to be used for property tax bills and
homeowner's insurance premiums. In that case, remember that you will receive a
refund of money left in that account, which will add to your proceeds.
For sellers: counteroffers
When you receive a purchase offer from a would-be buyer,
remember that unless you accept it exactly as it stands, unconditionally, the
buyer will be free to walk away. Any change you make in a counteroffer puts you
at risk of losing that chance to sell. Who pays for what items is often
determined by local custom. You can, however, arrive at any agreement you and
the buyers want about who pays for:
to the buyer's lender;
required by the lender; and
You may feel some of these costs are none of your
business, but many buyers -- particularly first-timers -- are short of cash.
Helping them may be the best way to get your home sold.
Author:Lee Buzalek Phone: 302-528-0222 Dated: May 3rd 2014 Views: 434 About Lee: ...
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