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 Once
you've found the right house, the next step is to make a
written offer. If everything goes well, this offer will
become the basis of a contract between you and the
seller for the purchase of your new home.
Real estate law requires that
everything
related to the purchase of a home be in writing. This is
because a
verbal commitment cannot be
enforced.
Your offer will be written on a standard,
pre-printed contract form provided
by the Greater Lansing Association
of Realtors.
A contract is created when the Buyer and Seller agree to
price and terms and have
signed all parts of the contract. The contract
clearly outlines the terms of the sale and establishes
the
rights and obligations of the Buyer and Seller. It
specifies how the property will be paid for
and sets a time frame for the completion of
inspections and transfer of the
property.
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What's included in your written offer… |
The
Offer Price
The Seller is
primarily interested the amount money you're offering for the home.
You, of course, don't want to overpay. So, how
much do you offer?
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Your Buyer's Agent
will be able to research recent
sales to see how the asking price compares
with similar homes. |
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Having chosen this home over all the
others you've looked at, it's
reasonable to conclude that you
already have a fairly good sense of
its value. |
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Consider the Seller's motivation.
Divorce, new job, retiring?
If the home is vacant, the Seller is
probably carrying two mortgages.
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It's a Buyers market. Unless the
home is "steal" offered at below
market value, there may be room for
negotiation. |
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Pre-approval letter
If you’re financing the home, a letter from your lender
needs
to be included with the
offer. Such a letter assures
the seller that you
have the funds to purchase the home.
Without it, the Seller may not respond
favorably.
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Closing
costs
Buyer "closing costs", the amount of money
needed to obtain the mortgage,
may be written
into the contract as a "seller concession". This
practice is known as "asking the Seller to pay
closing costs".
The phrase is misleading since the Seller
doesn't really pay the Buyer's closing costs.
The sale price of the home is raised to include
closing costs
as part of the purchase price.
Example: The Buyer offers $150,000 for a home
asking the Seller to contribute 3% for closing
costs. The Seller having no reason to give the
Buyer a $4500 gift, presents a counteroffer of
$154,500. The Seller will still receive
the offered price, while giving $4500 to the Buyer
who is
financing the closing costs as part of his
mortgage. |
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Date of Closing and Occupancy
The offer will specify the date you would like to close
and take possession of the property. You should expect
to move into a vacant home immediately
after closing. However, a Seller may have
negotiated additional time to move out. The
Seller will then
be expected to pay "rent" for the days
he occupies the home after ownership has been
transferred to you.
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 Items
included in the sale
Items physically attached to a property are called “fixtures”
and are expected to remain with the home. Fixtures include appliances, window treatments, sinks, built-in bookcases,
the heating and air conditioning
system, trees and bushes. Furniture and
decorative items are "personal property" and not
considered to be fixtures.
You may have seen a fully
equipped kitchen and laundry when you visited
the home. However,
the
washer and dryer, and perhaps the refrigerator may be
reserved. Sellers
are required to itemize reserved items
on the listing agreement and are to refer to them
as
"not available" in their disclosures. A Buyer can
request that specific "reserved" items
be included in
the offer as a condition of the deal, but
the seller may say no.
NOTE: You may also
exclude property from the sale. Suppose
the Seller is including an above ground swimming
pool or a play structure you have no
use for. You can ask that these be removed as a
provision of the sale. |
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Contingencies in your
offer |
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The Purchase offer includes two standard
contingencies:
1.
Financing
Contingency:
Unless you are offering
cash, your offer will be dependent on
your ability
to obtain a mortgage loan. You cannot be
forced to purchase the home if you are denied a loan.
2.
Inspection
Contingency: This
allows the Buyer to have professionals examine
the property to evaluate its condition. Should the home
inspection reveal problems that were not noticed when
you made the offer, you can give written notice that
you are terminating the
contract.
"Contingent on the Sell of a Home"
Without assurance that you have a
buyer for your home, the Seller is likely to reject your offer. If not rejected,
the Seller may counter with a provision
allowing him to sell to someone else if you are unable
to remove the contingency. Basically, your offer is no
better than than no offer at all.
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NOTE: This contingency can work if you have a buyer for
your current home and are only waiting for the closing.
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Earnest
Money Deposit |
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 The
offer requires a show good faith in the form of "Earnest Money"
deposited with the
Realtor. The money is held in a private, non-interest
bank account and
is applied to your closing costs. The deposit will be returned
should
you decide to not purchase the home as a result of the
inspections or if you should fail to get financing.
The deposit amount usually varies with
the price of the home. $500 to $1000 would be
appropriate for a home priced below $100,000. Offers
between $100,000 to $200,000 would require a deposit of
$1000 to $2000. A home priced above
$200,000 may require several thousand dollars.
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IMPORTANT:
You may forfeit the deposit if you
elect to not close the deal after removing all contingencies. |
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The Seller's Response |
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The
Seller is not required to respond to an offer.
Sellers usually ignore low-ball offers and those with
unfavorable conditions such as absurd time lines,
unusual finance arrangements, and contingent on the sale
of buyer's home.
Should
the
Seller wish, he may respond to your offer in one of
these ways:
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Accepted as it
is written. This means that seller is
satisfied with all aspects of your offer and has
accepted it without any additional provisions.
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Rejected. A Seller will reject an offer
with a very low price or one that contains
conditions that he is unable to work with.
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Amended by the
seller. An amended response is a counter
offer. The Seller is expressing terms that better
suit his needs. You can accept the
seller’s terms, reject them, or write a new offer.
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Dealing with a counteroffer |
Always remember that the
Seller owns the property. No matter what you've heard
about the Buyers being in control during a "Buyer's
Market", the Seller isn't required to agree to your price
and terms.
Should the Seller respond with a counteroffer that is
unacceptable to the Buyer, the Buyer can submit a second
offer that may be closer to the Seller's response.
There's no limit to the number of offers and
counteroffers that
can be exchanged before arriving at
an acceptable "deal". |
