Step 5: Make an Offer
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Once you have found the home you want to buy, you will need to negotiate a price with the seller and agree to a purchase contract. Unlike many major purchases which have a specific price tag, homes sell for whatever amount the buyer and seller negotiate. Be sure you are serious about buying before you make an offer. If the seller accepts your offer, it becomes a binding legal contract after a few days. Your real estate agent or legal counsel should help you determine the best amount for your initial offer. When you make the offer, keep these things in mind:
- All negotiations should be handled in writing – never verbally – to ensure that there is a clear understanding between the parties, and so that there is a tangible record of your negotiating history to refer to if need be.
- Have your pre-approval from your lender. This will give you maximum leverage; sellers generally prefer offers from buyers whose financing is already secured.
- Be prepared to submit an earnest money deposit (also called a "good faith" deposit) to show your commitment to the transaction. This deposit will go into an escrow account until the transaction is complete.
You should negotiate for a professional home inspection as a condition in your purchase agreement. Make the sale contingent on a satisfactory inspection, with a clause requiring the seller to make legitimate repairs and giving you the right to cancel the contract without penalty if the seller refuses. If there's anything in need of repair or replacement, you may include these costs in the negotiation. If you want certain appliances or fixtures to stay, be sure to include them in the negotiation. Once the seller accepts your offer, the offer becomes a contract - you've contracted to buy a house. The purchase contract is a signed agreement between the buyer and seller defining all the terms of the transaction. Like other contracts, this document represents a legally binding agreement, so approach it with care. Depending on what state you live in, an attorney, real estate agent, or title company may help negotiate and draft the contract. Purchase agreements typically include these elements:
- The home address.
- Legal description of the property.
- The sale price and the amount of the loan, down payment, and deposit.
- The names of both parties and their respective agents, brokers, or attorneys.
- Any applicable time limits. These may apply to the buyer's acquisition of financing, the seller's response to the offer, the closing, or the transition of occupancy.
- Any conditions or contingencies that must be met in order to complete the transaction. For example, the contract may be contingent on the buyer's ability to obtain financing, the home being appraised at a certain value, the results of a home inspection, or the sale of the buyer's current home.
Remember that no two real estate transactions are exactly alike. Buyers and sellers bring different backgrounds, interests, and agendas to the negotiating table, and the purchase contract will reflect those differences. |
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