The Basics of Making an Offer
The purchase offer you will become a binding sales contract if accepted. It is important to cover all aspects of the offer such as including the washer and dryer or that chandelier you like and want to keep with the home. Other purchase offer items may include:
- Sale Price.
- Address and sometimes a legal description of the property.
- Financing Terms, unless it’s an all cash offer.
- The closing date.
- Whether the seller will help pay for the buyer’s closing costs.
- Amount of earnest money deposit with the offer.
- Method by which real estate taxes, rents, fuel, water bills and utilities will be prorated by the buyer and seller.
- Provision of pre-closing inspection.
- Time limit after which the offer will expire.
- Contingencies, which are an extremely important matter and are discussed further below.
A contingent offer means the purchase will only occur if a certain event occurs.
Two examples are:
- The buyer obtains financing approval from a mortgage lender. If the loan can’t be secured, the buyer will be released of their obligations in the contract.
- A satisfactory home inspection report within a specified time frame after acceptance of the offer.
Offers with advantageous positions for the buyer:
- An all cash offer
- Pre-approval for a mortgage
- You do not need to sell your current home in order to purchase the new home in your offer.
Your earnest money represents your commitment to closing the transaction and gives the seller re-assurance your willing to make that happen. The earnest money deposit will be held in a trust account by the seller’s broker or an attorney. The earnest money will become part of your down payment.
Seller’s binding response to your offer
Your offer will be binding if the seller, upon receiving your written offer, signs, accepts and transmits the offer to you or your agent and becomes a firm contract as soon as you are notified of acceptance. If the offer is rejected, the offer is no longer valid.
The seller may counter-offer if they want to change any parameters of your offer such as the sale price, proposed closing date or inclusion of any personal property such as furniture. You can then accept or reject it or make another counteroffer back to the seller.
Each time either party makes a counter offer, the previous offer becomes null and void and the counter offer is the new offer. The document becomes a binding contract only when one party finally signs an unconditional acceptance of the other side’s proposal.
Withdrawing an offer
An offer can be cancelled up until acceptance has been conveyed to the other party.
What to Expect at Closing in addition to closing costs
The following is a typical situation that generally takes place at most closings:
- Arrive at the title company. Usually the sellers will also be present, unless they’ve pre-signed their settlement documents.
- Ensure your mortgage lender has successfully processed and submitted your mortgage package to the settlement company, if not, this may delay closing. A delay in closing can cancel the transactions or cost you significant daily fees closing delay fees up until a new closing date.
- You should receive a Good Faith Estimate (GFE) from the title company, usually a day or two before closing. The GFE will tell you how much money in certiﬁed funds that you will need to bring to closing.
- Be sure to bring a valid photo ID to closing; the Patriot Act requires this.
- Owner’s title insurance is optional, but like the purpose of any insurance policy, if you can’t afford the loss of your home, you will probably want it and is usually required by the mortgage company.
- Buyer must bring certiﬁed funds and remember, certiﬁed funds should be obtained the day prior or in the early morning to be safe.
- You will receive keys to your new house at closing. After closing, the home is yours.