your offer to Purchase
an Offer to Purchase Real Estate
Once you find the home
you want to buy, the next step is to write an offer – which is not as easy
as it sounds. Your offer is the first step toward negotiating a sales
contract with the seller. Since this is just the beginning of negotiations,
you should put yourself in the seller’s shoes and imagine his or her
reaction to everything you include. Your goal is to get what you want, and
imagining the seller’s reactions will help you attain that goal.
an offer to purchase real estate, you include not only the price you are
willing to pay, but other details of the purchase as well. This includes how
you intend to finance the home, your down payment, who pays what closing
costs, what inspections are performed, timetables, whether personal property
is included in the purchase, terms of cancellation, any repairs you want
performed, which professional services will be used, when you get physical
possession of the property, and how to settle disputes should they occur.
Your Offer Price
you prepare an offer to purchase a home, you already know the seller’s
listed price. But what price are you going to offer and how do you come up
with that figure?
your offer price is a three-step process.
you look at recent sales of similar properties to come up with a price
range. Then, you analyze additional data, such as the condition of the
home, improvements made to the property, current market conditions, and
the circumstances of the seller. This will help you settle on a price
you think would be fair to pay for the home. Finally, depending on your
negotiating style, you adjust your "fair" price and come up
with what you want to put in your offer.
Also, your REALTOR may be able to tell you the average list
price-to-sales price ratio for the area that the house is in.
The first step in
determining the price you are willing to offer is to look at the recent sales
of similar homes. These are called "comparable sales." Comparable
sales are recent sales of homes that compare closely to the one you are
looking to purchase. Specifically, you want to compare prices of homes that
are similar in square footage, number of bedrooms and bathrooms, garage
space, lot size, and type of construction.
are two main sources of information on comparable sales, which are easily
accessed by a real estate agent. It is somewhat more difficult for the
general public to access this data, and in some cases impossible. These
information sources are the public record and the Multiple Listing Service.
to Include in The Sales Contract
In most cases, you will be expected to provide a deposit or
earnest money payment with the offer. The
check should be made to the listing real estate brokerage, who will keep
the money in escrow until the negotiations are complete. Always
get a signed receipt. Be
sure that you will get your money back if the sale is not completed due
to the seller or certain contingencies that you have written into the
contract. If you decide to
back-out of the contract, you will probably forfeit the deposit to the
of the Offer
The standard Purchase and Sale form includes a provision for
you to specify how long the seller may take to respond to your offer.
This prevents the seller from keeping you in suspense while
waiting for a better offer.
List the items you want
to be included in the real estate sale.
These non-fixtures may include curtains, appliances, workbenches, etc.
Items that are physically and permanently attached usually are
automatically included in the sale except when the seller specifically
indicates the exclusions in the sales contract.
It is best to specify any items you want included so there will be no
in an Offer to Purchase Real Estate
In most purchase
transactions there may be a slight challenge or two, but most things will go
quite smoothly. However, you want to anticipate potential problems so that if
something does go wrong, you can cancel the contract without penalty. These
are called "contingencies" and you must be sure to include them
when you offer to buy a home. Contingency
clauses can protect you from possible problems or events.
The more experienced your real estate attorney or agent, the greater
protection he or she can build into the offer to purchase.
are some common contingencies you should include in your offer. Since you
probably need a mortgage to buy the home, a condition of your offer should be
that you successfully obtain suitable financing. Another condition should be
that the property appraises for at least what you agreed to pay for it.
During the escrow period you are likely to require certain inspections, and
another contingency should be that it passes those inspections.
protect you in case you cannot perform or choose not to perform on a promise
to buy a home. If you cancel a contract without having built-in conditions
and contingencies, you could find yourself forfeiting your earnest money
Date / Transfer of Possession
Your offer to purchase
should also include your proposed closing date. On this date you will meet
with the bank, seller and attorneys to formally purchase and pay for the
transaction is considered "closed" once the deeds have been
recorded. Then you own the home.
Typically, in our area, the closing and possession dates are the same.
However, it is not always possible for you to occupy it immediately.
This can happen for several reasons, but the most common is that the
seller may be purchasing a home, too. Usually,
their purchase is scheduled to close simultaneously with your purchase of
their home – but try to be as flexible as possible if “glitches” arise.
you have completed and double-checked the contract, it is presented to
the seller. If the seller
accepts everything in the contract, including the price and all of the
contingencies, the offer becomes binding on both the buyer and seller
subject to the contingencies. If
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.
what you say within ear-shot of either a real estate agent or a seller.
Everything you say can, and will, be used in the negotiating process.
For example, if you submit a contract with a figure lower than the listed
price, don't let the seller's real estate agent know that you are willing to
pay more. Never confide your
negotiating strategy. In
Vermont, a real estate agent is legally bound to the seller unless you have
engaged a buyer's
broker or agent who will represent you, the buyer.
Is Buyer Agency Right For You?
respond to any suggestions or counteroffers unless they are presented in
writing. For example, if a
seller or his agent tells you that your offer is too low, insist on a written
counter-proposal indicating the price (or other changes) that would make your
offer acceptable. Don't feel
pressured into raising your price on the spot.
the seller agrees to make repairs (based on negotiations following a home
inspection report) insist that they be done by contractors that you, the
buyer, select and that the improvements be completed under your supervision.
Otherwise, the work could be poorly done with incompetent labor and
/or inferior materials.
submit a contract to a buy a house after seeing it only once!
Return for another look the following day or weekend, and again, if
necessary. Visit the house
immediately after a rain or heavy snow, if the weather cooperates, to see if
there are visible water problems. Don't
be embarrassed to revisit the houses you like most.
Remember, you don't really "see" a house on the first visit
but find yourself focusing on features like wallpaper, a great master
bathroom, or garage space. You
may have little or no memory or even an inaccurate impression of the rest of
in mind that Federal Housing Administration (FHA) and Veterans Administration
(VA) loans do not allow the financing of points. Any points in financing these loans must be paid in cash by
you or by the seller. A seller's
willingness to negotiate may depend on the market and how anxious he or she
is to sell. In a tight market or
if the seller has to move, he or she may be willing to pay points.
around for the best mortgage terms. Get
Pre-qualified to know what you can spend and do not view real estate that is
above your qualifications. The
lender with the lowest interest rates may also have the highest closing
costs. You may be able to negotiate with your lender to waive or reduce certain fees if the competition
among lenders is strong. Your REALTOR can help guide you through the maze of
financing alternatives that are available.
to buy a house is the process of telling sellers and their real estate agent
at what price and on what terms you are interested in their property.
Many buyers don't realize they are allowed to negotiate on any feature
of the transaction. This is where the services of a buyer's
broker or agent can be valuable.
to make compromises. Do not be
afraid to ask questions. Doing your homework will help you buy a house with
the confidence and knowledge that you have made the best decisions.
©Copyright 2013 Brenda Jones Real Estate Group
Licensed in the State of Vermont