|Types Of Mortgage Loans||Mortgage Lender Directory + Mortgage Calculators + Mortgage (ARM) Indexes||Mortgage Market Survey|
|+ Find The Best Mortgage +||Ask A Mortgage Related Question + Articles And Publications + Mortgage Glossary||+ Search Mortgage Rates +|
|Credit Grade Guide||Historical Mortgage Index Data + Historical Mortgage Rate Data + Home||Interest Rate Trends|
Making an Offer to Purchase
|When you have determined the amount to offer, you should prepare a written offer, also known as a binder, to be presented to the seller. Typically there are forms that can be filled out to make a formal offer. But if there are contents that you don't agree with, or would like to see modified, you may make changes or additions
to the form.
An offer usually includes an offer price, the proposed closing date, contingencies and the amount of earnest money to show that the homebuyer is serious about buying the house. The offer should also state the time frame under which the offer is valid.
You can make an offer contingent upon certain conditions:
Financing contingencies. The binder should provide that your deposit will be refunded and the sale has will be canceled if you are unable to get a mortgage loan within a stated period of time. You may also make your offer contingent on obtaining a loan on specified terms.
If your ability to buy new home depends on the sale of your current house, you may add this condition to the offer to purchase.
Inspection results. You may wish to include an inspection contingency in the purchase offer, which will allow you to cancel closing on the deal if an inspector finds problems with the property. In that case, you may want to re-negotiate for a reduced sale price or require the seller to
make repairs. An inspection should examine the structural soundness, the condition of the roof, the plumbing and electrical systems.
Environmental Hazards You may want to have the home tested for possible environmental hazards which are not usually visible, including, the presence of radon or asbestos, lead-based paint or other toxic materials. To have the right to cancel the sale based on the results of risk assessment for environmental hazards you will need to include this condition in your offer.
Appraisal. Appraisers review numerous factors including recent sales of similar properties, location, square footage and construction quality to estimate the property market value. A lender will require an independent appraisal of the market value of the home you want to purchase, because your home will serve as collateral for the mortgage. Generally, the amount of your loan can be no more than 95 percent of the appraised property value or purchase price, whichever is less. So, why not make the receipt of a satisfactory appraisal part of the terms of your offer to purchase?
Title. The seller should provide title, free and clear of all claims by others against your new home. A title search is usually done by an attorney or title company to reveal the existence of the claims and encumbrances. It is most advisable that your offer has a provision which will permit you to withdraw from the contract with no penalty to you if the seller cannot deliver good title. A title search is generally a loan requirement as well.
If you make your offer contingent on certain conditions, it is advisable to set a time limit on contingencies, because, if the seller accept the offer he will be taking his house off the market on your behalf, without any guarantee that the sale will go through. For example, you can make your offer contingent upon receiving a satisfactory appraisal of the home within three or five days of acceptance of this offer.
Closing date. The binder should require the seller to transfer title to the property to you on or before an agreed date. But the buyer are also committed to the purchase of the property when the closing date arrives. When you decide the closing date, take into consideration the time you need to get your loan approved.
Earnest money could vary from $500-$2000, although it is usually $1000. If the sale goes through, the earnest money is applied against the down payment. If the buyer changes his mind or is unable to purchase, the earnest money is forfeited unless the binder expressly provides that it is to be refunded. If the purchaser wants the downpayment to be refundable, he should insert a clause in the binder specifying the conditions under which the deposit will be refunded.
A binder secures the right to purchase real estate upon agreed terms for a limited period of time. If there were other properties you wished to make offers on, a short acceptance period would be in your best interest. You have also the right revoke your offer at any time up to the time that the seller accepts your offer.
After you make an offer, there's a good chance you'll get a counter-offer in return to start the negotiation process. It's a normal part of the sales and purchase process, and not something to be avoided or reluctant about.
Here some important things you need to negotiate with the seller:
Appliances. The purchase agreement should provide for appropriate identification of what appliances and personal property you want to be sold with the home. Generally, the built-in appliances, such as window coverings, tacked down carpets, and fixtures permanently attached to the property are assumed to be sold with the property. Appliances and devices that are not built in and easily removable such as refrigerator, portable dishwasher, freestanding stove, are usually up for negotiation.
If the seller agrees to make some repairs include it in the contract. Then stipulate you have the right to make a final inspection of the home within 24 hours prior to the actual closing to make sure any required repairs have been completed, the appliances described in the contract are present, and all is in order.
You can negotiate which closing costs you will pay and which will be paid by the seller. (Visit our page Closing Costs to see the list of the costs and fees you can expect to pay at closing).
You should agree with the seller about how expenses related to the house (property taxes, utilities etc.) are to be divided on the date of closing and when you will move in, specially if there are tenants occupying the house.
You need to agree with the seller all the terms you want to be included in the purchase contract since by the time of closing, any changes may be difficult to negotiate.
As soon as the seller accepts a written offer, the document becomes a legally binding contract known as a contract of purchase, or purchase agreement according to location or jurisdiction. A purchase agreement must be signed by both parties. Make sure you do understand everything that is in the contract before you sign.
Many home buyers are capable of handling routine real estate purchase contracts, as long as precautions are taken, and an attorney are unnecessary. But if you are not sure you understand every term of the contract, or you anticipate any problems with the transaction, it is reasonable for you to take legal advise while working on and accepting a purchase agreement. Legal documents are often complicated and you may avoid a lot of future conflicts if you get such advice. Hiring an attorney after a complications start up may be too late and lawsuits are costly and time-consuming. In some states, such as Florida, for example, the law requires you do have an attorney to complete a real estate transaction.
Buyers who need an attorney should call several and inquire about fees, but it's important to find someone with experience.
Mortgage Lender Directory + Find The Best Mortgage + Search Mortgage Rates