With the help of our office, you will submit a signed real estate offer to purchase with the type of financing you desire. Before you sign it, read it carefully and make sure you understand every detail. This will be the sales contract once the seller accepts and signs the offer. Any verbal agreements should be written into the contract. If you plan to have a lawyer represent or advise you, retain one as early as possible.
Offers and Counter Offers
Your offer will go to a “contract presentation” with the home seller and listing broker. The seller will accept it as written, make counter offers on unacceptable aspects, or reject it. You can then accept it, counter-the-counter offer, or reject it. The offer to buy becomes a contract when all parties have initialed every counter and signed the offer.
When you sign the offer to buy, you will also have to show that you are earnest about the purchase by submitting a deposit—appropriately called earnest money.
Contract Provisions
While sales contracts differ from transaction to transaction, there are several provisions you may want to include:
- Deposit - The amount of earnest money should be clearly stated, plus the amount of money you will be paying at settlement and your sources of financing. A common purchase deposit in many areas is 1-2% of the purchase price, deposited in escrow.
- Financing Contingency - Be specific about the total loan amount, the date a second or third mortgage is due, and the exact financing terms. Many contracts have an “alternative financing clause” that allows buyers to accept different financing, as long as it does not affect the seller’s net proceeds.
- Inspection Contingency - You may make the contract contingent on a building inspection report. You will usually have to pay for this inspection, but the peace of mind or detection of a problem is well worth the cost of inspecting.
- Termites - The contract may require the seller or buyer, depending upon the area, to pay for a termite inspection. The results of this inspection may require payment to remove the infestation and repair any resulting damages. You should get a written report at settlement indicating that the property is free and clear of any active termite infestation. In some areas, well and septic certificates are also required.
- Personal Property - Specify in writing if items not physically attached to the house are to be included in the sale. These items can include light fixtures, drapery rods, appliances, firewood, and even swimming pool chemicals.
- Repair Work - Standard contracts of sale require sellers to confirm plumbing, heating, mechanical, and electrical systems are in working order at the time of settlement. You should conduct a pre-settlement walk-through inspection several days before or no later than the day of settlement.
- Title Attorney or Insurance Company – As the buyer, you have the right to select the title attorney or insurance company who will conduct your settlement. Also, be sure to clear the title company with the lender, whose interests are also involved. Ask your Long & Foster sales associate for a list of our Prestige Partners®, who provide settlement and insurance services throughout our region.
- Closing and Occupancy Date - Include an arrangement with the seller, such as a daily rent-back agreement, in case they remain in the house past the settlement date.
Negotiating Tips
You're in a strong bargaining position, that is, you look particularly welcome to a seller, if:
- you're an all-cash buyer
- you're already have a preapproved mortgage and you don't have a present house that has to be sold before you can afford to buy
- you’re able to close and take possession at a time that is especially convenient for the seller
In these 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 the following considerations in mind:
- every month a vacant house remains unsold represents considerable extra expense for the seller
- if the sellers are divorcing, they may want to sell quickly
- estate sales often yield a bargain in return for a prompt deal
Buyers: 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.