The Offer Process
HAVE A STRATEGY... In trying to determine an amount to offer and an overall strategy, the buyer should have comparable properties as a point of reference. It is generally recognized that property value opinions/appraisals allow for a value variance of plus or minus a given percentage. Your agent will be able to provide market insights. There are several national websites that provide neighborhood sales data.
THE DOCUMENT... In Massachusetts it is common real estate practice for an offer to be made using an Offer To Purchase document containing several “contingencies”. Typically, the Offer To Purchase language will call for (be contingent upon...) another document, the Purchase and Sale Agreement (“The P & S”) to follow. Knowing what contingencies you plan to make part of your offer terms should be something you give thought to at the outset.
PUT THE OFFER IN WRITING... While as a buyer you may be inclined to want to “sound a seller” out by suggesting a price verbally through your REALTOR®, do not be surprised if the seller will only deal with offers expressed in writing and accompanied by a deposit or “earnest money”. That way, terms other than simply the selling price (like settlement date, financing, inspections, etc.) are spelled out.
OTHER THAN PRICE... Obviously, price is important but there are additional elements (or “terms”) for an Offer to be considered.
DEPOSITS... In a residential sale it is typical practice for an initial binder check of $1,000 dollars (made out to the escrow account of a REALTOR® or lawyer) to accompany the written offer form. It is normal for this check to be deposited if and when the offer is accepted in writing. Additional deposit funds of up to 10% of the purchase price (to be applied against the total purchase price) are usually due upon the signing of the Purchase and Sale Agreement.
FINANCING... Many buyers need to obtain a mortgage in order to bring to the closing sufficient funds to complete the purchase. For this reason, many Offers are contingent upon financing a stated amount at a stated interest rate. A time limit is set in the Offer for obtaining the mortgage.
CONDOMINIUM DOCUMENT REVIEW... If the Offer is on a condo, it is common to make the offer subject to review of the condo association by-laws, budget, et cetera.
INSPECTION CONTINGENCIES... Buyers often make their offers subject to professional inspections of the property. Usually there is a 5-10 day period to conduct these inspections. Contingency extensions and/or inspection results should be
in writing. A directory of certified Inspectors can be found at http://www.homeinspectors.com/.
DATE OF TITLE TRANSFER... The date for the property to pass to the buyer is one of the terms agreed to at the time of the Offer.