Successful home searches lead to offers. Offers formalize the homebuying
process by committing in writing to purchase a property, subject
to certain terms and conditions.
An offer will start with home
value, which should take into account the competitiveness of the
local marketplace and your level of desire for the house. In a
soft market where home sales are slow, you may be able to structure
an offer with terms very favorable to you. However, if homes are
selling briskly, you may need to make your offer more compelling
for the seller.
In either case, the seller has the right not to accept
any offer - even those at or above asking price.
Generally, offers must be in writing, signed and dated by all buyers,
and include the following:
- Offer Price: how much you are agreeing to pay
- Expiration Date:
when the offer expires, if not accepted
- Closing Date: when you
can take ownership, including elimination of all contingencies
the amount you will place into an escrow account to secure your
offer (typically 5% - 10% of the offer price)
- Contingencies (if
any): such as mortgage financing and inspections
This is only an overview; how an actual Offer to Purchase is submitted
and progresses through a transaction varies from state-to-state,
and often from town-to-town.
In many locales, an agent will assist a buyer in completing and submitting
a standard form Contract to Purchase, which will be negotiated and,
if accepted, will become the complete agreement between the parties
for the purchase and sale of the property. This Contract to Purchase
is frequently referred to as the Buyer's Offer until such time as
it is accepted by the seller, at which point it is referred to as
the Purchase Contract, or Purchase and Sale Agreement.
In other areas,
it is common practice for a buyer to submit a simplified Offer to
Purchase, or Binder, as a preliminary step in the process. This Offer
or Binder is negotiated and agreed to by the parties; the parties
are expected to enter into a more detailed Contract to Purchase,
or Purchase and Sale Agreement, after the initial steps in the process
are complete (note: depending upon the practices of the locality,
these Offers or Binders may or may not be considered legally binding).
It is wise to become familiar with the offer and purchase contract
practices in your market area, with legal assistance if appropriate.
To learn more about the practices in your area, contact a Coldwell
Banker Residential Brokerage homeownership professional.
The seller has the following options when considering offers:
- Accept the offer as proposed
- Counter-offer with a modified offer
- Reject the offer and return
If the seller counter-offers, negotiations will continue until all
terms are agreed upon (or, because the original offer was not accepted
as submitted, either party may withdraw from the negotiations, at
which time the deposit should be returned). Until the offer is accepted,
the buyer may withdraw the offer and a seller may entertain other
offers. Once the offer is accepted, the home inspection process begins,
after which the parties proceed to execute the purchase contract
(typically within 5-10 days), and begin the closing steps.
Additional negotiations may ensue if inspections uncover unanticipated
issues and costs. As these inspection findings would constitute a
change to the terms as agreed upon, the seller has the right to refuse
or accept any change requests. [Note: verbal agreements regarding
the sale of real estate are generally not enforceable, until agreed
to in writing by all parties.]