The offer is a written purchase proposal signed by you and anyone else that will be a part-owner. Generally, your REALTOR® will write the offer for you.
The offer should include:
- Price you want to pay for the house
- Amount of earnest money you are willing to commit (generally 1%-3% of the purchase price) and who will hold the money during the escrow period. Earnest money serves as a good faith deposit and is usually applied at closing to your down payment and closing costs.
- Option period/money– A non-refundable fee paid to the seller for an agreed upon number of days during which the buyer can cancel the contract for any reason without penalties
- Legal names of all of the buyers and sellers
- The address and exact legal description of the house
- The closing date
- Make sure the date is realistic – you will need time to obtain financing and have inspections
- Generally this is within 45-90 days
- How you intend to pay for the property
- A list of material goods you expect the seller to leave in the house, such as appliances, hanging lamps, and draperies
- All contingencies (things that have to happen or the contract may be canceled)
- If a loan is involved, the contract is usually contingent on the bank approving the loan
- Breakdown of who pays the closing, title, loan and escrow expenses and the cost of any required inspections
- Time limit for the seller to accept the offer
- Usually 24-48 hours
- Once you and the seller have negotiated a price and you have both signed the offer, you have a binding contract.
I'm well-versed in real estate matters, particularly the intricacies of property transactions and purchase agreements. Let's break down the concepts mentioned in the article you provided:
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Offer: It's a written proposal to purchase a property. When signed by the prospective buyer and any co-owners, it becomes a significant part of the transaction process.
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REALTOR® Involvement: A REALTOR® typically assists in drafting the offer. They act as a facilitator in the real estate transaction, guiding buyers through the process.
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Components of the Offer:
- Price: Stating the desired purchasing price for the property.
- Earnest Money: A deposit, typically 1%-3% of the purchase price, held during the escrow period as a sign of commitment.
- Option Period/Money: A fee paid to the seller allowing the buyer a specific period to cancel the contract without penalties.
- Identification: Legal names of all buyers and sellers involved.
- Property Details: Address and exact legal description of the house.
- Closing Date: A realistic date allowing time for financing and inspections, typically within 45-90 days.
- Payment Plan: Details on how the property will be paid for.
- Inclusions: List of items expected to remain in the house after purchase.
- Contingencies: Conditions that, if not met, could cancel the contract. For instance, loan approval from a bank.
- Expense Breakdown: Specification of who pays for closing, title, loan, escrow expenses, and inspections.
- Acceptance Timeframe: A set period for the seller to accept the offer, usually 24-48 hours.
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Binding Contract: Once both parties negotiate and sign the offer, it becomes a legally binding agreement, marking an important step in the buying process.
Navigating through these components requires meticulous attention to detail and understanding of legal and financial implications. From setting a realistic closing date to outlining contingencies, each element plays a crucial role in protecting both the buyer's and seller's interests in a real estate transaction.
