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- WRITING AN OFFER TO PURCHASE REAL ESTATE:
- your AGENT can HELP you through the process
- usually TAKES a HALF AN HOUR or so
- NOT simply offering a PRICE
- the OFFER SPELLS OUT stuff like...
- PRICE BUYER WILL pay
- how BUYER WILL FINANCE the purchase
- DOWN PAYMENT
- who pays what CLOSING COSTS
- what INSPECTIONS and PAID by WHOM
- TIMETABLES
- PERSONAL PROPERTY to be INCLUDED in the PROPERTY
- terms of CANCELLATION
- what REPAIRS BUYER wants made
- what PROFESSIONAL SERVICES will be used
- WHEN WILL BUYER TAKE POSSESSION
- how to SETTLE ANY DISPUTES
- BUYER SUBMITS OFFER with EARNEST MONEY (usually < 2% of PRICE)
- SELLER then ACCEPTS, REJECTS or COUNTER-OFFERS
- if ACCEPTS then
- EARNEST MONEY is placed in ESCROW
- will be APPLIED toward PURCHASE PRICE at CLOSING
- if REJECTS then
- EARNEST MONEY CHECK is RETURNED to BUYER
- if COUNTER-OFFERS then
- original offer is TERMINATED
- COUNTER-OFFER becomes NEW OFFER
- BUYER ACCEPTS, REJECTS or COUNTER-OFFERS
- and so on...
- CONTINGENCIES:
- written into an OFFER as a WAY OUT if SOMETHING GOES WRONG
- VERY COMMON
- EXAMPLES:
- "PENDING SALE":
- MOVE-UP BUYERS may make CLOSING on their OLD PLACE a
CONTINGENCY in the OFFER to BUY the NEW PLACE
- so the BUYER is NOT STUCK with TWO MORTGAGE PAYMENTS
- BUYER makes OBTAINING FINANCING a CONTINGENCY
- APPRAISAL MUST be >= PURCHASE PRICE - very common
- PROPERTY shall PASS certain SPECIFIED INSPECTIONS
- PULLING OUT WITHOUT a CONTINGENCY...
- BUYER could have to FORFEIT EARNEST MONEY
- OR WORSE
- EARNEST MONEY:
- PONIED UP by the BUYER when WRITTEN OFFER is MADE
- shows the SELLER that the BUYER is SERIOUS
- s/b <= 2% of OFFER PRICE
- more can cause the lender to ask questions
- usually just amounts to an inconvenience though
- if there is some dispute, you have little money tied up
- disputes are rare though
- but sometimes MORE EARNEST MONEY is PUT UP in a HOT MARKET
to GAIN SELLER'S FAVOR AMID MULTIPLE, SIMILAR OFFERS
- and it's APPLIED toward the PRICE at CLOSING anyway
- DISCLOSURES:
- you have DONE your WALK-THROUGH and LOOKED AROUND but...
- SELLER KNOWS the PROPERTY INTIMATELY and EVERY LITTLE THING
that's WRONG like...
- BASEMENT LEAKS, ROOF LEAKS, PLUMBING LEAKS
- AIRPORT or TRAFFIC NOISE
- stuff like that
- SO BUYER can DEMAND DISCLOSURE of STUFF like that in OFFER
- if FOUND OUT AFTER CLOSING, REMEDY can be SOUGHT in COURT
- INSPECTIONS:
- ALWAYS have an APPRAISAL and TERMITE INSPECTION
- also have a PROFESSIONAL HOME INSPECTION
- your AGENT will help you SET UP INSPECTIONS
- make FAVORABLE RESULTS a CONTINGENCY in the OFFER
- or at least allow RENEGOTIATION, otherwise CANCELLATION
- allow 15 days to receive reports and 5 days to review them
- FINAL WALK-THROUGH:
- DEMAND this right in your OFFER
- to VERIFY that SELLER ADHERED to CONDITIONS in the OFFER
- s/b done NO SOONER THAN 5 DAYS PRIOR TO CLOSING
- FINANCING IN YOUR OFFER:
- your OFFER will be CONTINGENT on OBTAINING FINANCING UNLESS
you are PAYING CASH (paying CASH is RARE but happens)
- so FINANCING PLANS are INCLUDED in OFFER for SELLER'S REVIEW
- he'll want to know your DOWN PAYMENT
- MORE DOWN, EASIER to QUALIFY
- state the MAXIMUM INTEREST RATE you can PAY
- in some markets RATES can be VOLATILE
- can make PAYMENTS UNAFFORDABLE
- putting this CONTINGENCY IN the OFFER protects BUYER
- SELLER FINANCING:
- SELLER "CARRIES BACK" a SECOND MORTGAGE
- when SELLER does NOT NEED ENTIRE PRICE in a LUMP SUM
- instead SELLER receives DOWN then MONTHLY PAYMENTS
- MINIMUM TERM is FIVE YEARS
- MINIMUM PAYMENT is INTEREST-ONLY
- CASH OFFERS:
- RARE but they happen
- SELLER will WANT PROOF that you can swing it like...
- a BANK STATEMENT or something
- if LIQUIDATING STOCK, a TIMETABLE for SHOWING PROOF of that
- OTHER INFO TO PROVIDE SELLER:
- FIXED or ADJUSTABLE RATE
- CONVENTIONAL, VA, FHA
- FHA AND VA FINANCING:
- BUYER MUST DISCLOSE FHA, VA FINANCING to SELLER in OFFER
- because it places SELLER under some OBLIGATIONS
- APPRAISAL INSPECTIONS are MORE DETAILED in FHA, VA
- "NON-ALLOWABLE" FEES in FHA, VA:
- fees BUYER is FORBIDDEN to pay, so SELLER MUST
- most FEES are for LENDER,
- some for SETTLEMENT CO and TITLE INSURANCE CO
- your AGENT will know what FEES apply in your case
- so INCLUDE a CEILING for these FEES in your OFFER
- otherwise you're asking SELLER to COMMIT to a BLANK CHECK
- which NO SELLER WOULD DO
- SERVICE PROVIDERS DURING THE TRANSACTION:
- there are PARTIES involved OTHER THAN just BUYER and SELLER
- ESCROW/SETTLEMENT COMPANY
- OVERSEES the EXECUTION of an ACCEPTED OFFER
- SPECIFY what company you want in your OFFER
- you don't buy property every day so your AGENT can HELP
- SELLER might SPECIFY another COMPANY in his COUNTER-OFFER
- because HE has an INTEREST in this ALSO
- TITLE INSURANCE COMPANY:
- PROVIDES an OWNERS POLICY which...
- PROVIDES CLEAR TITLE to the PROPERTY
- if there are any CLAIMS on the TITLE LATER...
- the TITLE INSURANCE COMPANY HANDLES IT and
YOU SLEEP GOOD
- customary for SELLER to PAY so he may want to SAY WHO
- separately, there is ALWAYS a LENDER'S TITLE INSUR POLICY
- INSURES LENDER that HE is FIRST CREDITOR and that there
are NO LIENS or OTHER CLAIMS on the TITLE
- cheaper than OWNER'S POLICY because the PRINCIPAL,
which is the LENDER'S stake, is being PAID DOWN
during the LOAN TERM
- TERMITE AND PEST INSPECTION:
- BUYER usually DEMANDS FAVORABLE RESULTS in OFFER
- TERMITES, TERMITE DAMAGE, OTHER INFESTATIONS, DRY ROT,
WATER DAMAGE, other stuff
- customary that SELLER PAYS but negotiable
- RESULTS are most IMPORTANT TO BUYER
- again, your AGENT can RECOMMEND a COMPANY
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