Making An Offer

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A written proposal is the foundation of a real estate transaction which specifies the price and all the terms and conditions of the purchase. 

REALTORS® have standard purchase agreements and will help you put together a written offer that reflects the terms and conditions that are right for you. Your REALTOR® will guide you through the offer, counteroffer, negotiating, and closing processes. REALTORS® will make sure any legalities are taken care of such as certain disclosure laws with the seller.

If you choose not to work with a real estate agent, keep in mind that you must create a purchase offer which complies with local and state laws. Certain provisions may also be required in your area. 

Once an offer is created, it is presented to the seller or the seller's agent by your real estate agent. 

A purchase offer includes:

• The address and legal description of the property.
• Sale price.
• Any terms and conditions (e.g. all cash or subject to you obtaining a mortgage for a given amount).
• The seller's promise to provide a clear title of ownership.
• The target date for closing (the actual sale date).
• The amount of a (if any)  earnest money deposit(s) accompanying the offer and how it shall be returned if the offer is rejected or kept in damages if you later back out of the offer.
• The method in between which taxes, rents, fuel, and utility payments are to be adjusted between the buyer and seller.
• Provisions about who will pay for title inspections, surveys, termite inspections, etc.
• Type of deed to be given.
• Any other requirements specific to your state.
• A provision that the buyer may make a last minute walkthrough inspection just before the closing.
• A time limit (preferably short) after which the offer will expire.
• Contingencies which are extremely important and will be discussed below.

If your offer says "this offer is contingent upon (or subject to) a certain event," this means that you will only go through with the purchase if that event occurs. Two examples of contingencies include:

• The buyer obtaining special financing from a lending institution: if the loan cannot be found, the buyer will not be bound by the contract. 
• A satisfactory report by a home inspector: for example, "within 10 days after acceptance of the offer." The seller must wait 10 days to see if the inspector submits a report that satisfies the buyer. If not, the contract would become void. Be sure that all the details are explicitly stated in the contract.

You are in a strong bargaining position (you look particularly welcome to the seller) if:

• You're an all cash buyer.
• You already have a preapproved mortgage and don't own a present house that must be sold before you can afford to buy. 
• You are able to close and take possession at a time that is convenient for the seller.

In these circumstances, you may be able to negotiate a discount from the listed price. 

On the other hand, if the perfect house comes on a hot seller's market, you may want to offer the list price (or more) to beat out the early offers. 

Keep the following considerations in mind:

• Every month a vacant home remains unsold represents an extra expense on the seller. 
• Estate 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. An earnest money deposit shows "good faith" in the offer. A real estate agent or an attorney usually holds the deposit and it becomes a part of your down payment.

You will have a binding contract if the seller, upon receiving your written offer, signs an acceptance as it stands (unconditionally). The offer becomes a firm contract as soon as you are notified of acceptance. If the offer is rejected, the sellers could not later change their minds. 

If the seller likes everything about the offer except for the sale price, the proposed closing date, etc, you may receive a counteroffer including the seller's preferred terms. You may accept it, reject it, or create your own counteroffer.

Each time either party makes any change in the terms, the other side may accept, reject, or send another counteroffer. The document becomes a binding contract once a party signs an unconditional acceptance of the other side's proposal.

You may choose to take back an offer until the moment the offer is accepted or, sometimes, if you haven't been notified of its acceptance. If you wish to revoke your offer, only do so after consulting a lawyer who is experienced in real estate matters. You don't want to lose your earnest money deposit or be sued for damages the seller may have suffered by relying on your actions.

When you receive an offer, you can accept it as it stands or make a counteroffer. In evaluating a purchase offer, you should estimate the amount of cash you want to walk away with when the transaction is complete. 

Once you have a specific proposal in front of you, calculating net proceeds becomes simple. From the proposed purchase price, you can subtract the following costs:

• The payoff amount on a present mortgage.
• Any other liens. 
• The broker's commission.
• The legal costs of selling (attorney, escrow agent, etc).
• Transfer taxes.
• Unpaid property taxes and utility bills.
• If required in the offer: the cost of the survey, termite inspection, buyer's closing costs, repairs, etc. 

Remember that unless you accept an offer from a buyer exactly as it stands, unconditionally, the buyer is free to walk away. Any change you make in a counteroffer puts you at risk of losing that chance to sell.

You can negotiate with the buyer any agreement you want about who pays for the following costs:

• Termite inspection
• A survey
• The buyer’s closing costs
• Any points paid to the buyer’s lender
• The buyer’s broker fees
• Repairs required by the lender
• A home protection policy