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Know what to do when making an offer on a home

A written proposal is the foundation of a real estate transaction.

Oral promises are not legally enforceable when it comes to the sale of real estate. Therefore, you need to enter into a written contract, which starts with your written proposal. This proposal not only specifies price, but all the terms and conditions of the purchase. For example, if the sellers said they’d help with $2,000 toward your closing costs, be sure that’s included in your written offer and in the final completed contract, or you won’t have grounds for collecting it later.

Realtors usually have a variety of standard forms (including Residential Purchase Agreements) that are kept up to date with the changing laws. When you use a Realtor these forms will be available to you. In addition, Realtors cover the questions that need to be answered during the process. In Ohio, certain disclosure laws must be complied with by the seller, and the Realtor will ensure this takes place.

If you are not working with a Realtor, keep in mind that you must draw up a purchase offer or contract that conforms to state and local laws and that incorporates all of the key items.

After the offer is drawn up and signed, it will usually be presented to the seller by your Realtor, by the seller’s Realtor if that’s a different agent, or often by the two together.

WHAT THE OFFER CONTAINS

The purchase offer you submit, if accepted as it stands, will become a binding sales contract. It’s important, therefore, that it contains all the items that will serve as a “blueprint for the final sale.” These purchase offer items include such things as:

– Address and sometimes a legal description of the property;

– Sale price;

– Terms — for example, all cash or subject to your obtaining a mortgage for a given amount;

– Seller’s promise to provide clear title (ownership);

– Target date for closing (the actual sale);

– Amount of earnest money deposit accompanying the offer, and whether it’s a check, cash or promissory note, and how it’s to be returned to you if the offer is rejected — or kept as damages if you later back out for no good reason. Earnest money is a deposit that you give when making an offer on a house. A seller is understandably suspicious of a written offer that is not accompanied by a cash deposit to show “good faith.” A Realtor will deposit the earnest money, once your offer is accepted, in the brokerages account, the amount of which varies from community to community. This will then become part of your down payment;

– Method by which real estate taxes, rents, fuel, water bills and utilities are to be adjusted (prorated) between buyer and seller;

– Provisions about who will pay for title insurance, survey, termite inspections and the like;

– Type of deed to be given;

– A provision that the buyer may make a last-minute walk-through inspection of the property just before the closing;

– A time limit (preferably short) after which the offer will expire;

– Contingencies, which are an extremely important matter and discussed in detail below:

If your offer says “this offer is contingent upon (or subject to) a certain event,” you’re saying that you will only go through with the purchase if that event occurs.

The following are two common contingencies contained in a purchase order: The buyer obtaining specific financing from a lending institution. If the loan can’t be found, the buyer won’t be bound by the contract. A satisfactory report by a home inspector “within 10 days (for example) after acceptance of the offer.” The seller must wait 10 days to see if the inspector submits a report that satisfies you. If not, the contract would become void. Again, make sure all the details are nailed down in the written contract.

NEGOTIATING TIPS

You’re in a strong bargaining position — meaning, you look particularly welcome to a seller — if:

– You’re an all-cash buyer;

– You’re already pre-approved for a mortgage;

– You don’t have a present house that has to be sold before you can afford to buy.

In those circumstances, you may be able to negotiate a better price. It’s very helpful to find out why the house is being sold and whether the seller is under pressure.

Keep these considerations in mind:

– Every month a vacant house remains unsold represents considerable extra expense for the seller;

– If the sellers are divorcing, they may just want out quickly;

– Estate sales often yield a bargain in return for a prompt deal.

For the best advice, call a member of the Warren Area Board of Realtors.

Cunningham is the 2020 president of the Warren Area Board of Realtors.

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