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Making an Offer

WRITING A PURCHASE AGREEMENT

Writing the purchase and sale agreement in a precise and thorough manner is important to you and the seller.  Using the correct form with the approved legal jargon and carefully filled in blanks will protect both parties from future confusion and disputes.  Each state has it’s own laws and preferred forms to use.  Your real estate agent will usually use the form that is approved by the state’s real estate commission.

The real estate agencies, the buyer, and the property description including the address are identified on the form.  Next is the price that you will be offering to the seller.  Your real estate agent can guide you through this, but the decision of what to offer is yours.  The agent can put together a market analysis showing the neighborhood history of listings and sales.  As with any part of the offer, the price can be negotiated.  If the seller doesn’t agree with your offering price, they can write a counter offer showing what they are willing to take for the house.

You will be putting an earnest money deposit with the offer.  The amount and the form of that earnest money (personal check, cash, cashiers check, or note) will be indicated on the offer.  The earnest money will be applied to the purchase at closing.

How you finance the purchase and the amount of down payment will also be included in your offer.  You will be committing to the type of loan (Conventional, FHA, VA, etc.), an approximate interest rate and a time frame as to when your lender will give final approval for the financing.

Any contingencies to the purchase will also be included.  For example, if you need to sell your present home before purchasing the new home that will need to written into the offer.  Generally, a time frame will be given for the completion of any contingency.

Items to be included and excluded with the home will be listed.  The seller’s listing will usually show items to be included or excluded.  The form will also have a pre-printed list of fixtures to be included such as window coverings, floor coverings, appliances, heating and cooling systems, etc.  If you are not sure whether some thing may be included, write it in the offer.  Also, if there are any items that you want  to be removed from the property (such as old equipment, children’s swing set, above ground pool, etc.) they will need to be written into the contract.

Title insurance and title conveyance will need to be addressed in the offer.  A time frame to review title documents including covenants will need to be written into the offer.

Your agent will advise you to get an inspection done.  The inspection and your approval of the results will become a contingency in the offer.  Again, a time frame will be given as to when the inspection will be completed and any repairs done.   The items to be repaired are negotiable and can void an agreement.  Any special inspections such as radon, termite, mold, etc. will need to be included in the offer along with a time frame for completion.  You as the buyer will usually be responsible for arranging and paying for the inspection.  You may also include a home warranty plan as part of the offer.  The party who pays for the warranty is negotiable.

Who pays for various expenses needs to be written into the agreement.  A few expenses may included: appraisal fee, closing fee, document preparation fee, flood certification fee, tax service fee, attorney fee, title insurance fees, well inspection, septic inspection, survey, etc.  Your agent can guide you in deciding who should pay for those fees.

The timing of the closing and occupancy need to be very specific.  Closing occurs after the signing, funding, and recording with the county.  Occupancy should not be expected until after those events have taken place.  The date and time of occupancy should be written into the contract.  Any issues with possession need to be in writing.  If the seller occupies the property after the closing, the buyer may charge the seller a per diem.  The  amount charged can be collected at closing.  Again, this needs to be writing.

A response time to your offer needs to be written into the agreement.  A time of 24, 48, or 72 hours is typical.

Include as much detail in the agreement as possible to avoid any confusion or disagreements later on.  Your agent will be a great asset in guiding you through this exciting process of buying your new home.