What is the Offer to Purchase Process?

Congratulations! You have found the home you want to buy! Now, you need to write an offer which is not as easy as it sounds! Your offer is the first step toward negotiating a sales contract with the Seller. This is the beginning of many negotiations you will have with the Seller so you should put yourself in the seller's shoes and imagine his or her reaction to everything you include. Your goal is to get what you want and imagining the Seller's reactions will help you attain that goal!

What makes up an offer? An offer is not as simple as stating, "This is how much I will pay." There are large dollar amounts involved and in today's litigious society, both you and the Seller want to build in protections and contingencies to protect our investment and limit your risk. Your offer will include not only the price you are willing to pay, but other details of the purchase as well. These details will include how you intend to finance the home, your down payment, who pays what closing costs, what inspections are performed, timetable summary="table"s, whether personal property is included in the purchase, terms of cancellation, any repairs you want performed, which professional services will be used, when you get physical possession of the property, and how to settle disputes should they occur. It is a very important and involved process!

Buying a home is a major event for both you, as the Buyer, and the Seller. It will affect your finances more than any other previous purchase you have made. The Seller will be making his own financial decisions based on your offer that will also effect him! You are making decisions about how where you will be living for the next several years or maybe the rest of your life! The Seller will look closely at your offer as moving and/or selling will also effect him for the rest of his life!

Choose your contingencies carefully! A contingency is an item in the contract that allows you to cancel without penalty if there is a problem. You might have an inspection contingency allowing you a period of days or weeks to review the property and perform inspections before you proceed to purchase. You may have a loan contingency that allows you a period of time to obtain suitable financing or you can cancel. You may have an appraisal contingency stating the property must appraise at the purchase price or you may cancel. If you are selling a home in order to buy the new home, you may have a contingency allowing you to sell your home before you purchase the new home. Contingencies protect you in case you cannot perform or choose not to perform on a contract to buy a home. If you cancel the contract without the benefit of a specific contingency, you could find yourself forfeiting your earnest money deposit.

What is an Earnest Money Deposit? After you decide on your offering price, you need to select the amount of deposit you wish to give the Seller with your offer. It should be large enough to let the Seller know you are serious, but not so large that you are placing significant funds at risk. A standard amount is approximately 2-3 percent of the offering price. However, a larger deposit may entice a Seller to accept your offer instead of someone's else's.

When do you wish to close? Your closing date is an essential part of your offer to purchase! This is not only the date that you will be looking forward to moving, but this is also the date that the Seller must move out of the property, escrow and title work must be done, and your loan must be complete by. Most transactions close on time, but it is advisable to position yourself to be flexible in case you close a day or two late. You don't want your family sleeping in the moving truck!

When do I own the home? A transaction is considered "closed" once the deeds have been recorded at the County. When the deed is recorded, it is your home! In your offer to purchase, you will state the date that you wish to take possession. Sometimes additional contracts can be written, if necessary, to allow you to take possession a few days prior to the close or to allow the Seller to stay a few days after the close to complete his move-out. Any changes in the date of your possession should always be on a separate agreement stating the details!