||STEP 5: MAKING AN OFFER
After carefully searching, you finally found the right home and you’re ready to make an offer.
An offer is a legally binding commitment stating that you will buy the home for a specific price provided that certain terms and conditions are met. Once the seller accepts your offer, it must be signed both by you and the seller.
Considerations for the offer
You may want to think about the following as you prepare your offer:
- What is the age and condition of the home?
- Are any repairs needed? What will they cost?
Are the sellers willing to share any of the expense?
- How long has the property been on the market?
- How active is the market (i.e., buyer's or seller's market)?
- Are the sellers anxious to sell?
- Is the property in a particularly desirable location or school system?
- Does the home meet many, most, or all of the items on your wish list?
Preparing the offer
Pay close attention to all the details. Be sure that the offer clearly outlines all the terms and conditions of the sale, including:
- Your name and the name and the seller's name
- The property's address
- Any special provisions regarding fixtures, appliances, etc.
- The purchase price being offered (including the deposit put down to bind the offer and the deposit to be paid upon the execution of the Purchase and Sale Agreement)
- Any additional riders and deadline dates
- Any contingencies to which the offer is subject (e.g., pest inspection, securing financing)
Timing and deadlines
Now it’s time to get out your calendar. Take time to think about how long it will take you to negotiate the offer with the seller, get an inspection, and get approved for a mortgage. Consider meeting those deadlines when you set a closing date. Your deal could fall through if deadlines aren’t met.
Negotiating the offer
After you make your offer, the seller may accept, reject or counter it with a different price. If the seller counter-offers, you can then accept, reject, or counter that. While the negotiation goes on, the house will stay on the market.
Check out this link for more tips about the homebuying process.
Do I Need an attorney?
To protect your best interest, we recommend that you retain an attorney when purchasing your first home. The attorney will also:
- Help you prepare the offer
- Help negotiate the sale price and conditions of the sale
- Draft and/or revise the Purchase and Sale Agreement to protect you and your money
- Assist you with the mortgage process
- Prepare you for the final walk-through of the property
- Attend the closing and represent your interests
- Provide you with a three-day right of review of the Purchase and Sale Agreement
Purchase and Sale Agreement
It’s not over yet! After negotiations are settled and your offer is accepted, a Purchase and Sale Agreement is written up by the broker. This document spells out the agreement in specific detail. Because it’s a legally binding contract, have your attorney review it before you sign it.
Provisions and contingencies
Your first line of defense before you go into contract on your first home is to include provisions and contingencies in your offer. This ensures that you and your money are protected in the event that the loan is not approved and the deal is called off. It is very important that the Purchase and Sale Agreement include a mortgage contingency clause, which states that your buying the home is dependent on your ability to get a mortgage. Such a clause allows you to keep your deposit if your mortgage isn’t approved.
Other contingencies to be added to the Purchase and Sale Agreement should be based on the home’s condition, pest, radon, and lead paint inspections. The closing date and occupancy date should also be indicated. Learn more about provisions and contingencies.
The home inspection
You wouldn’t buy a car without taking it for a test drive, the same goes for a home. Having a professional assess and inspect the home will help you know if you are getting what you’re paying for.
Once you schedule an inspection, a home inspector will look carefully at the condition of the home, letting you know about any potential problems or necessary repairs. An inspection usually costs a few hundred dollars and is paid for by the buyer. You can learn more in Step 7: The Home Inspection.