Life is complicated. And at first glance, you may also think that purchasing a home is just as complicated. At least, it may seem that way once you realize that a fully executed real estate contract may have a dozen or more pages.
However, the length and detailed information contained within those pages is a good thing because it helps to fully represent the terms agreed upon by the buyer and seller for the protection of both parties. If you are currently searching for a home to purchase and are somewhat concerned about the wording or length of the purchase offer you will be making, the following information may help you gain helpful insight and feel more confident in your role as a buyer.
What is Usually Included in the Purchase Offer?
Once you have found the home you want to buy, you will want to move forward by putting together a purchase offer. The offer is contained in a document that will identify information about the home you want to purchase, such as the address and legal description. Your real estate agent will prepare the purchase offer for you.
The offer documents will also contain the terms of the offer you are making to the seller, including specific information, such as:
- the amount of money you are offering for the home
- how the offer is structured such as how much cash you wish to put down on the home, how much your earnest money deposit is, how you will pay for the home (as in cash or mortgage), and the date upon which you will close the transaction
- the terms of the mortgage you will be using, if you are financing the home
- the type of deed that will be transferred upon closing
- the proration of taxes or other bills, such as utilities, that may be involved in the transaction
- the date and time at which your offer will expire and become void
- any contingencies that apply to your offer, such as those for financing and home inspections
- specific information regarding closing dates, inspections periods, loan commitment periods, walk-through time frames, and any riders or other documents pertinent to that particular transaction
What is a Contingency?
A contingency is an additional condition that can be added to a home sale contract; it becomes a requirement or condition that must be met to complete the sale. A contingency can be added by the buyer or seller; if a stated contingency is not met then the home will not be sold.
While contingencies vary, some contitions are more common than others. A buyer who wants to be sure a home is in good shape may add a contingency that the seller provide and pay for a full inspection. A contingency can also include the buyer’s ability to secure a mortgage to pay for the home.
While contingencies can protect either party, they can also make a seller wary of proceeding, particularly in hot real estate market.
Is a Purchase Offer Binding Upon the Seller?
Buyers should always remember that a purchase offer is only an offer at this point and the seller is not bound to abide by anything contained in the offer until they accept and sign it. Once the seller signs the document, it becomes a valid contract. Because sellers are not bound to the terms of any offer until they sign it, buyers should offer a relatively short time frame for seller acceptance.
Can Buyers Cancel a Purchase Offer?
Making an offer to purchase should be done only when buyers are certain they want to purchase a property. Although an offer can usually be withdrawn right up until the point at which it is accepted by the seller, there can be serious consequences for doing so. Before moving to revoke any offer, take time to discuss the matter with your real estate professional to fully understand the potential consequences before doing so. You may also want to consult a real estate attorney, if necessary.
What Happens if the Seller Counters the Offer?
Should the seller not agree with some or all of the terms offered by the prospective buyer, they will likely issue a counter offer. These documents place control back into the hands of the buyer who will then be able to accept, reject, or counter the new terms offered by the seller. If the buyer accepts the counter offer, as written, and signs it, the purchase offer then becomes a valid real estate contract at that time.
To get the best possible understanding of the real estate purchase offer documents, ask your real estate professional to go over a sample copy with you. Doing this will help you become more comfortable with the wording and terms used in them and help you become more confident about the entire transaction process.
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