Owning and Renting Property

Making an Offer on a House: What You Need to Know

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Have you found the home you want to buy? Your next step in the home-buying process will be submitting an offer to the seller. Sounds pretty official, doesn’t it? Making an offer on a house involves some serious paperwork – a contract that is binding if the seller accepts your offer.

Before you submit your offer, you’ll want to make sure you understand what you’re signing. Most real estate agents and attorneys have a standard form that they use to submit an offer. The offer should include the following:

  • Expiration date of the offer. This is the amount of time the seller has to consider your offer before it expires, which could be hours, days or weeks after the offer is submitted. Your real estate agent will help you determine how long to give the seller to accept or counter your offer.
  • Purchase price. This is the total price you’re offering to pay to purchase the home from the seller.
  • Initial deposit. Also known as earnest money, this is a good faith deposit that will be held while you obtain financing for the mortgage.
  • Down payment amount. You’ll want to make clear how much you will be paying in cash as part of the sale. This money is not financed and you’ll need to disclose proof of this down payment to the seller with a bank statement, check, etc.
  • Financing terms. List out the rate and terms you have to receive from a lender if you’re financing the sale.
  • Required home inspection. Including this means you are entitled to have the home professionally inspected for construction defects, home systems functionality, code compliance and general habitability. You can also include provisions for how the buyer must respond to identified problems.
  • Contingencies. Describe events that would void your offer to purchase – for example, you being unable to get a certain interest rate for financing or the inspection revealing serious structural problems.
  • Warranties. Confirm that the buyer can provide proof of ownership (with a title) and request any home warranties that you’d like included as part of the sale.
  • Fees associated with closing. This will make clear if you’ll be responsible for paying closing costs and, if so, how much.

The seller can do one of the following:

Accept your offer.

Reject your offer.

Make a counter-offer stating the terms of the offer that need to change or be added to be acceptable.

If the seller makes a counter-offer, you can accept or reject it, or make your own counter-offer to the new terms. This back-and-forth will go on until both parties are happy with the terms. The offer doesn’t become a binding contract until both parties sign the contract agreeing to the terms.

Interested in using a professional to help you with the legal and financial aspects of buying a home? Discover how to find the right realtor for you.

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