Making An Offer

Making an offer must be a calculated move. Chances are, when you find a home you absolutely love, someone else may love it too. So it’s important to act quickly and make an educated offer based on a rational approach to pricing and negotiating that you and your agent have discussed. A Comparative Market Analysis Report is quite handy before Making an offer to purchase any property. To start the process rolling, your agent will draw up a contract that includes your offering price and other terms and contingencies. Buyers often focus on price, but there are other important terms to a real estate contract before making an offer to purchase. You can include any terms you like, but the more you add, the more likely the seller is to object. Here are the most common elements of a real estate contract:

• Price:The market will determine the final price, but your agent will help you formulate an offer based on comparable listings and sales, and current market conditions.
• Mortgage Contingency:When making an offer you can add contingencies to protect your deposit. For example, a mortgage contingency stipulates that you will buy the home subject to obtaining a mortgage. If you cannot obtain a mortgage, and the seller will not agree to finance the sale, then the contract will be void. The terms of the mortgage must be stated in the contract when making an offer, and you will also need to establish a time frame for securing financing.
• Home Inspection Contingency:  A thorough inspection of the property by a licensed home inspector protects you against structural or material problems that are not detectable in a casual walk-through. Home inspections are just as important in new construction as they are in resale. Obviously, buyers can’t inspect a home that isn’t built yet, but they can request an inspection prior to closing. In new construction, an inspector will make sure that all mechanical systems are working properly. They may also spot repairs that need to be added to the builder’s punch list (a list of items that need to be completed before the home is delivered to the buyer). The buyer, not the seller, is responsible for hiring and paying the inspector. It is important to be educated about who pays for what before making an offer.
• Attorney Approval: Attorney approval is generally a one-week period, in which your attorney can review the contract and suggest alterations. In most transactions, the seller is also represented by an attorney. Alterations will usually focus on the language of the contract in an attempt to protect you from any undue obligations. Your attorney will also add language to address points that were agreed to as part of the negotiation but that is not a part of a standard contract. Even if you are using a standard-form real estate contract, an attorney’s review is always highly recommended. It is also recommended that you use an attorney that specializes in real estate transactions. Something that is obvious to a real estate attorney might be overlooked by an attorney that isn’t familiar with real estate transactions or real estate contracts. Upon attorney review, if the contract is not acceptable to either party, both have the option to cancel. If the contract is acceptable, then the transaction moves forward.
• Earnest Money:Earnest money is a deposit, given by the buyer to the seller, which secures the contract until the closing. An initial deposit, usually in the form of a check, must be given to the seller or seller’s agent along with the contract and the balance of the earnest money is usually due upon attorney approval. Earnest money is typically held in an escrow account until the closing, when it may be applied to the down payment and/or closing costs. If the sale does not go through due to contingencies covered within the contract, then the earnest money may be returned to the buyer. However, if a buyer is in breach of contract, then a seller may be entitled to keep all or a portion of the earnest money.
• Closing Date:One of the most important terms of a real estate contract is the closing date – the date when ownership changes hands. This is usually, but not always, the date that the seller must vacate and the buyer may occupy the property. Flexibility on the closing date can give a buyer a big advantage over other potential buyers. Occasionally, it can also allow you to negotiate a lower price or other, more favorable terms.