Once you find a home you would like to place an offer on, move quickly but do not get to emotional about the offer – unless you really are willing to pay above market value and potentially lose equity in the home from day 1.
Your Realtor will facilitate completing an offer on your behalf. Consider the following in preparing the offer:
- Are there other offers being made on the home at present?
- How long has the home been on the market?
There are certain clauses in the offer for costs that can be paid for by either the buyer or the seller. These include:
- The cost of obtaining a survey
- The cost of the Title Insurance Policy
- The cost of a Residential Service Contract
- Payment of Closing Costs
- Cost of repairs to the property
What you propose in your offer will be dependent on the strength of your position as a buyer. If you really want the home and you are in a multiple offer situation, specifying that the buyer will pay for all these expenses can increase the strength of your offer. If the home has been on the market for a long time and yours is the only offer, then you can ask that the seller pays some or all of these expenses.
These are just 2 of many examples of situations that will affect how the offer is put together.
The offer is signed by the buyers and then submitted to the agent representing the seller. They may:
- Reject the offer out right
- Accept the offer as it is
- Make a counter offer
If a counter offer is acceptable to you the buyer, then you will need to initial the changes made.
Once both parties have signed the contract in full, the contract is dated and is termed executed – which means that a binding contract exists which both parties must adhere to under the law.
An option term and fee are also specified in the contract. The option period is a specified number of days that you may have access to the property to perform inspections and appraisals. The payment of the option fee gives you the ability to terminate the contract if you are find you no longer desire to purchase the property. Once the option period expires, you are legally bound by the terms of the contract. The option fee is paid directly to the sellers and can be applied to closing costs at closing.
Earnest money is also specified in the contract. Earnest money is an indication to the seller that you are earnest or serious about buying their property. It is not required to pay anything but offers are very seldom accepted when no earnest money is put down as a deposit on a home. The Earnest Money check is made out to the Title Company specified in the contract who will facilitate the closing of the property and is held in escrow. It will be managed according to the terms of the contract.