Crafting the Offer
Crafting an offer to buy a house is part science, part art. The science, or business, part includes the offer price, the inspections, how the closing costs will be paid and the date the keys are handed over. The art of an offer is more subtle and entails matters such as the strength of an offer (how likely the buyer is to close), how willing the buyer is to negotiate on small details and how smoothly the transaction will proceed. A good seller’s agent will look carefully at both aspects of an offer, and RJRE prides itself on how our offers float to the top of the stack.
Here is a quick overview of some of the parts of an offer:
We already know the list price of the property, but what price are you going to offer and how do you come up with that figure? The market will likely determine how aggressive you want to be with the offer price and how likely the seller is to accept. Your Russell Jones Real Estate professional will assist you with determining a range.
You will be expected to provide an earnest money deposit once the offer has been accepted. Mutual acceptance of an offer is not the end, however. Inspections and negotiations often continue. The earnest money is kept in escrow during that process. The purchase and sale agreement stipulates the reasons you can back out of the transaction and still get your earnest money back. A common stipulation is an inspection contingency which allows you to terminate the transaction based on an inspection. The earnest money deposit is a critical step in the homebuying process and an important part of an overall purchasing strategy.
Expiration of the Offer
The standard Purchase and Sale form includes an offer expiration date. This prevents the seller from keeping you in suspense while waiting for a better offer.
Contingencies in an Offer to Purchase Real Estate
Including contingencies is an important part of the art of writing the offer. Each real estate transaction is unique. An inspection may show severe water pipe damage or structural issues that cannot be seen from the outside. An inspection contingency is critical as it gives the buyer an opportunity to reject the offer based on the inspection. Another issue that can occur is a loan rejection by the lender. A financing contingency also protects your earnest money for such an occasion.
Such contingencies are excellent protection, but if written too strongly, contingencies can make a seller nervous and reject an offer, and contingencies written not strongly enough may put the buyer at a disadvantage. Another common contingency is that the appraisal is a minimum threshold, a requirement set by the lender.
Closing Date / Transfer of Possession
Your offer to purchase will also include your proposed closing date. A transaction is considered "closed" and the property changes hands once the deeds have been recorded. It is not always possible for you to occupy the home immediately. This can happen for several reasons, but the most common is that the seller may be purchasing a home, too.
Presenting the Offer
Once we have completed the agreement, it is presented to the seller. If the seller accepts all of the terms, including the price and all of the contingencies, the offer becomes binding on both the buyer and seller subject to the contingencies. If, however, the seller wishes to negotiate, a counteroffer is made with either a new contract or with notations and substitutions made on the original document. You then receive the revised contract and can either sign it, if acceptable, or reject it and make a second offer.
Expect to make compromises. Do not be afraid to ask questions and you can make sure your Russell Jones broker will guide you through the process.