Making a Real Estate Offer
A Real Estate offer is a written proposal that serves as the foundation of a real estate transaction. Oral promises are not legally enforceable when it comes to the sale of real estate. Therefore, you need to enter into a written contract, which starts with your written proposal.
This proposal not only specifies price, but all the terms and conditions of the purchase. For example, if the sellers said they'd help with $2,000 toward your closing costs, be sure that's included in your written offer and in the final completed contract, or you won't have grounds for collecting it later.
REALTORS® usually have a variety of standard forms (including Residential Purchase Agreements) that have been utilized thousands of times and are kept up to date with the changing laws. When you use a REALTOR® these forms will be available to you. In addition, REALTORS® offer protection for all parties and cover the questions that need to be answered during the process. In many states certain disclosure laws must be complied with by the seller, and the REALTOR® will ensure that this takes place.
Note: In a few areas, sales contracts are typically drawn up by the parties' lawyers.
If you are not working with a REALTOR®, keep in mind that you must draw up a purchase offer or contract that conforms to state and local laws and that incorporates all of the key items. State laws vary, and certain provisions may be required in your area.
After the offer is drawn up and signed, it will usually be presented to the seller by your REALTOR® by the sellers' REALTOR® if that's a different agent, or often by the two together.
What's in a Real Estate Offer
The contents of any real estate offer is very important because the purchase offer you submit, if accepted as it stands, will become a binding sales contract (known in some areas as a purchase agreement, earnest money agreement, or deposit receipt). It's important, therefore, that it contains all the items that will serve as a "blueprint for the final sale." These purchase offer items include such things as:
Address (sometimes legal description) of the property
Sale price
Terms (all cash or subject to your obtaining a mortgage for a given amount)
Seller's promise to provide clear title (ownership)
Target date for closing (the actual sale)
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
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 - "Subject to" Clauses
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 some common contingencies contained in a purchase order:
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. If not, the contract would become void.
Again, make sure that all the details are explicitly stated in the written contract.
