If you are in the process of looking at new homes, you want to be sure you know how to present a strong offer to the seller once you find the home you want. A strong offer could literally make or break a deal, especially in a hot market. Most real estate agents use a basic template when composing a purchase offer, therefore you are likely to find that the majority of purchase offers will include many of the component listed below.
Offer Amount: The amount you will offer on the home should be carefully discussed with your real estate agent. While the asking price is what the seller wants or needs to walk away with at the time of closing, the price you offer will take various factors into consideration, such as how long the house has been on market, how active the market is, and whether or not your agent believes the house is priced too high or too low.
Earnest Money/Deposit: This deposit essentially tells the seller that you are serious about purchasing their home. While generally between 1% to 3% of the price of the home, your agent might suggest you offer more, possibly upwards of 5%, if you’re buying in a seller’s market. The deposit is credited at the time of closing, reducing your closing costs.
Description of the Property: This will include the description as written on the title, including the full address, property measurements and full description of property boundaries.
Description of Fixtures and Appliances: This section outlines exactly what household appliances and fixtures, and sometimes even personal items that belong to the seller, including indoor or outdoor furniture or lawn décor, that will be included in the purchase at no additional cost.
Financing Method: This specifies how the buyer actually intends on purchasing the home providing they are not paying cash. The down payment, amount being financed, and method of financing will be disclosed. Various financing methods might include a conventional loan, FHA or VA loan.
Consideration Window: This specifies exactly how long the offer is good for.
Sewer and Water: Simply put, this section will identify the sewer and water services, advising if the property is hooked up to the town/city water and sewage system, if the property has a septic system, or if the property relies on well water.
Special Assessments: This section will be included if there are currently any special assessments put forth on the property by the city or town. Special assessments include paying for any projects relating to public infrastructure.
In addition to the above, you could also find the following contingencies with the purchase offer:
Home Inspection: Should the home inspector find a problem with the property that was not previously known or disclosed, this allows the buyer to back out of the purchase without penalty, renegotiate the offer price, or request that the seller fix the problem prior to closing.
Hazard Inspection: Hazard inspections are optional, but are sometimes recommended. For instance, if you believe there is a chance of lead paint or if you are located in an area with frequent termite infestations, it might be wise to pay for these additional inspections. The contingency will protect the buyer and allow them to back out or request that the seller pay to correct the issue without penalty.
Existing Property: If the buyer is selling their existing property and relying on the money of that sale to purchase this property, this contingency allows the buyer to back out or push the closing date out without penalty if for some reason the existing home is not sold by the closing date.
It’s important that your offer is in line with other offers that the seller will be receiving. If the property is receiving a lot of attention, be sure your offer will stand out above the rest. Work with your agent and consider any advice they offer, especially regarding the offer price, amount of earnest money and contingencies they recommend to protect you.