The quality and content of your offer is almost as important as how much you’re willing to pay for the property. Poorly written offers lessen the chance that buyers will get their offers accepted, and certain laws and rules can apply, so it’s critical to do your research and get it done right. You might need a manufactured home purchase agreement or one designed for a new construction residential purchase, depending on what you hope to purchase. Then there are more generic residential purchase agreements and residential income property purchase agreements. Your state might have a separate agreement form for vacant land or for properties that are in probate. The good news is that local realtor associations typically publish a variety of purchase contracts that are available to the public. You have a price in mind, and you must put it in writing. Barring extreme buyers’ markets or sizzling sellers’ markets, you’ll probably want to offer a bit less than you expect to pay. You can ask for guidance, but don’t expect your real estate agent to name a price for you if you’re working with one. That’s up to you. Spell out who will hold the deposit—almost anyone but the seller! Anywhere in the neighborhood of 1% of the purchase price is customary, but putting down more will likely signal to the seller that you’re a serious buyer. Just keep in mind that the seller might be entitled to retain your deposit if you decide that you don’t want the property after all and you default under the terms of the contract. Some states require verification of your down payment within a certain time period. It could be considered a contingency of the transaction if you’re selling an asset to raise the cash, such as by liquidating a mutual fund to raise the cash. If so, you should disclose this. Your offer becomes void and non-binding if you can’t make the sale in time. Disclose the type of financing you hope to obtain: conventional, FHA, VA, contract of sale, or assumption. Include mortgage points, especially if you’re asking the seller to pay them. Depending on your state, these contingencies can still be in effect all the way through to closing if you don’t remove them in writing. It’s important that you include any and all of them in your purchase contract. It’s important to specify when exactly you can expect to move in, so spell out the possession date in the purchase contract. It might be the day of closing or a day after closing, but make sure it’s in there. You might want to execute a rental agreement to protect all parties if you want to take possession prior to closing, or even if possession is going to be more than two or three days after closing. You’ll want some compensation or adjustment if the seller will be living there after you own the home, even if only for a short period of time. Call the listing agent before you write the offer and ask about the norm in your area. Sometimes fees for title, escrow, and county or city transfer taxes can equal 2 to 5% of the sales price. Let the seller choose if the seller is paying for the title and this is customary. Address all the issues you want to be investigated, such as for mold or solid roofing. Some buyers conduct all inspections before writing an offer just to alleviate this type of miscommunication. If it’s customary for a seller to provide certain reports, ask for them. You can set a reasonable deadline in a consideration clause, but it’s also a good idea to read over your state’s contract laws regarding offer expiration. You can consider the offer void and move on to another property if the seller doesn’t respond by this date. Clarify to whom an accepted offer should be delivered. You could lose the transaction if another offer pops up out of nowhere and you’re the designated recipient if you’re not available to accept delivery. And review the provisions you’ve included while you’re at it. Ask yourself if you’re really OK with all of them. This will turn into a binding contract if the seller accepts it, so be sure you can live with all the provisions your offer contains.
