Quality is important when it comes to submitting purchase offers. A poorly written purchase agreement can lessen your chances of getting your offer accepted by the seller. Therefore, writing up a quality purchase offer to submit to the seller is nearly as important as the price you offer to buy the home.
9 tips to help guide you when submitting purchase offers
#1: Make Sure You Use the Correct Form
Today’s real estate world has multiple purchase forms to encompass the different types of real estate being sold such as land, commercial, residential, etc.
#2: Make an Initial Deposit to Bind the Purchase Offer
To have a binding purchase offer, you need a deposit such as cash, cashier’s check, or personal check. You don’t want the seller to hold the check so you’ll want to put it in an escrow account held by an escrow agent. You can find a local title company to open an escrow account through an escrow agent and they’ll have you submit a check to them for holding on to.
#3: Write an Actual Purchase Price for the Offer
You’ll need to determine an actual price figure to write on the offer. This may be common sense but some people will try to write something ridiculous such as “I will pay $5,000 above your highest offer.”
Determine an amount with your real estate agent that you want to initially offer. You should probably submit an offer below purchase price because the seller will likely counter offer if he/she takes interest in your offer.
If it’s a hot market, you may have to offer above asking price to be competitive with other offers coming in. This scenario would be a bidding war, and you’ll want to consult your buyer agent for guidance on a safe offer above purchase price.
In a buyer’s market, you can likely submit an offer below asking price and get accepted.
#4: Disclose the Down Payment You’ll Be Making
Typically, you’ll make a cash down payment but it could also be in the form of stocks or other real estate assets. If you are selling stocks to finance the down payment, make sure to include this as a contingency of the transaction.
For example, you would say the down payment is contingent upon successful sale of stock to finance the down payment.
#5: Indicate Your Financing Terms
Disclose to the seller the type of financing you hope to obtain. It could be a conventional loan, FHA loan, VA loan, land contract, or other.
If you expect the seller to pay the points of a loan, include them for the seller to see.
#6: Include Contingencies
This is very important when writing a purchase offer. You want to let the seller know that your offer is contingent upon several factors in order to protect yourself. Most contracts already contain these provisions but make sure:
- Ability to obtain loan financing
If a contract has contingencies in it that you don’t want, you’ll have to remove them via writing or else the courts may hold that they are still in effect all the way to closing.
If you fail to obtain financing, you’ll be able to back out of the contract if you included it as a contingency clause in your contract.
If an appraisal reveals the property is worth less than the asking price of the seller, then you can use this to negotiate with the seller or as a contingency for backing out of the deal.
If an inspection reveals a cracked foundation or issues with the property that no longer make you want to purchase it, then having this contingency in the contract can help you back out.
#7: Determine the Possession Date
Make sure you state your terms for the day you want to take possession of the property. Do you want it the day of closing, or the day after closing, or 7 days after closing? Spell it out in the contract so that the seller sees it and can negotiate with you on it prior to closing to avoid a deal falling out of escrow at closing when the seller tries dictating an unreasonable date of possession.
#8: Determine Who You Want to Pay Certain Fees
The buyer and seller typically negotiate the different fees that need paid at closing. We mentioned the different things you should negotiate in a purchase agreement in this article.
Some fees may include: title, escrow, transfer taxes
#9: Offer Expiration Date
Determine when you want your offer to expire and clearly state it in your offer. Some buyers may give the seller just a few days to make a decision whether to accept. This can lead to a deal falling through because the seller didn’t get enough time or felt pressured by the buyer.
If you choose to work with a buyer’s agent like us, we will take care of these 9 steps for you and handle the negotiations with the seller. It’s free to work with us when representing you as a buyer’s agent because the seller pays the real estate commission. When you’re ready to buy a new home, give us a call.
- Phone: 574-536-9218
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- Email: Nick@TeamFoy.com
Kevin Foy, RE/MAX Oak Crest Realty