A written offer is the foundation of a real estate transaction. Oral promises are not legally enforceable when it comes to the sale of real estate. Your REALTOR® will help you put together a written, legally binding offer that reflects the price as well as terms and conditions that are right for you, and will guide you through the offer, counteroffer, negotiating and closing process.
After the offer is drawn up and signed the offer is presented to the seller’s real estate agent and then the seller’s real estate agent presents that offer to their clients who are selling the home.
If your offer is accepted as it stands, it will become a binding sales contract and serves as a “blueprint for the final sale.” The offer will include to following items:
- address and the legal description of the property
- sale price
- terms: for example, all cash or subject to you obtaining a mortgage for a given amount
- seller’s promise to provide clear title (ownership)
- target date for closing the sale
- amount of earnest money deposit accompanying the offer, 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 the transaction terminates
- method by which real estate taxes, rent and utility payments are to be adjusted (prorated) between buyer and seller
- provisions about who will pay for title insurance, survey, inspections, etc.
- type of deed to be given
- a provision that the buyer may make a last-minute walkthrough inspection of the property just before the closing
- a time limit (preferably short) after which the offer will expire
- contingencies, which are 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. Here are two common contingencies contained in a purchase offer:
- The buyer must sell there current home before they can purchase the new home.
- The buyer must obtain financing before they can purchase the new home.
You’re in a strong bargaining position, that is, you look particularly welcome to a seller, if:
- you’re an all-cash buyer
- you’re already have a preapproved mortgage and you don’t have a present house that has to be sold before you can buy
- you’re able to close and take possession at a time that is acceptable to the seller
In these circumstances, you may be able to negotiate some discount from the listed price.
On the other hand, in a “hot” seller’s market, if the perfect house comes on the market, you may want to offer the list price (or more) to beat out other early offers.
This 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.” The title company usually holds the deposit, the amount of which varies on each home. This will become part of your down payment.
You will have a binding contract if the seller, upon receiving your written offer, signs an acceptance just as it stands, unconditionally. The offer becomes a firm contract as soon as you are notified of acceptance.
If the seller likes everything except the sale price, or the proposed closing date, or the pool table you want left with the property, you may receive a written counteroffer including the changes the seller prefers. You are then free to accept it, reject it or even make your own counteroffer. For example, “We accept the counteroffer with the higher price, except that we still insist on having the pool table.”
Each time either party makes any change in the terms, the other side is free to accept, reject or counter again. The document becomes a binding contract only when one party finally signs an unconditional acceptance of the other side’s proposal.