Making an Offer & Getting a Contract on a House


Comparative Market Analysis

A Comparative Market Analysis (CMA) is something your REALTOR should prepare for you before you submit an offer.  The CMA compares the property you are interested in with others that are currently on the market and recently sold.  It should only compare homes that have similar bedrooms, bathrooms, square footage, lot sizes, and characteristics.  This report will also give you the average price of each of these comparisons.  This is a valuable tool to help guide you in making your initial offer to the seller and also being able to negotiate from an informed and educated standpoint of the market's value of the house you are trying to purchase. 


What the Offer Contains

If your offer is accepted, it becomes a legally binding contract or a Purchase and Sale Agreement so it is important that your offer contain everything necessary for an easy and successful close.  Taking shortcuts here can cost your money and/or time later.  You and your agent want to make sure the following is included.

  • Address & Legal Description of the Property
  • Sales Price
  • Terms (cash or subject to your obtaining a mortgage for a given amount)
  • Seller’s promise to provide clear title (ownership)
  • Target Date for Closing
  • 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
  • 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
  • Other requirements specific to your state, which might include a chance for attorney review of the contract, disclosure of specific environmental hazards or other state-specific clauses
  • 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


Contingencies

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 three common contingencies contained in a purchase offer:

  • 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 , the buyer . If not, the contract would become void  or renegotiated . Again, make sure that all the details are nailed down in the written contract.
  • The buyer sells their current house and uses the funds from that sale to purchase this house


Negotiating tips

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

  • You're an all-cash buyer; or
  • You're already pre-approved for a mortgage; and
  • 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 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.

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; and
  • Estate sales often yield a bargain in return for a prompt deal.


Earnest money

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." A REALTOR®  through their brokerage, an attorney , or a title company  usually holds the deposit, the amount of which varies from community to community. This will become part of your down payment.

 

Buyers: The Seller's Response to Your Offer

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  in writing of acceptance. If the offer is rejected, that's  the end of negotiations , and the sellers could not later change their minds and hold you to it.

If the seller likes everything except the sale price, or the proposed closing date, or the patio furniture want left with the property, you may receive a written counteroffer, with the changes the seller prefers. You are then free to accept or reject it or to 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 or reject it, or counter again. The document becomes a binding contract only when one party finally signs an unconditional acceptance of the other side's proposal.


Withdrawing an offer

Can you take back an offer? In most cases the answer is yes, right up until the moment it is accepted, or even in some cases, if you haven't yet been notified of acceptance. If you do want to revoke your offer, be sure to do so only after consulting a lawyer who is experienced in real estate matters. You don't want to lose your earnest money deposit, or find yourself being sued for damages the seller may have suffered by relying on your actions.

 

When it comes to making an offer many people are often anxious.  Buyers do not want to over pay but they also do not want to get their offer rejected.  It is important to have an agent that can successfully guide you  through  this process.  TEAM JOHNSON is that team.  You not only have one experienced agent helping you, you have an entire team all working together to get you that home you want.


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