The Basics of Making an Offer
A written proposal is the foundation of a real estate transaction. Oral
promises are not legally enforceable when it comes to the sale of real
estate. Therefore, you need to enter into a written contract, which starts
with your written proposal. This proposal not only specifies price, but
also all the terms and conditions of the purchase. For example, if the
seller offered to help with $2,000 toward your closing costs, make sure
that's included in your written offer and in the final completed contract, or
you won't have grounds for collecting it later.
REALTORS® have standard purchase agreements and will help you put
together a written, legally binding offer that reflects the price as well as
terms and conditions that are right for you. Your REALTOR® will guide
you through the offer, counteroffer, negotiating and closing processes. In
many states certain disclosure laws must be complied with by the seller,
and the REALTOR® will ensure that this takes place.
If you are not working with a real estate agent, keep in mind that you
must draw up a purchase offer or contract that conforms to state and local
laws and that incorporates all of the key items. State laws vary, and
certain provisions may be required in your area.
After the offer is drawn up and signed, it is usually presented to the seller
by your real estate agent, by the seller's real estate agent, if that's a
different agent, or often by the two together. In a few areas, sales
contracts are drawn up by the parties' lawyers.
What is in an Offer?
The purchase offer you submit, if accepted as it stands, will become a
binding sales contract (known in some areas as a purchase agreement,
earnest money agreement or deposit receipt). So it's important that the
purchase offer contains all the items that will serve as a "blueprint for the
final sale." The purchase offer includes items such as:
address and the legal description of the property
sale price
terms: for example, all cash or subject to you obtaining a mortgage
for a given amount
seller's promise to provide clear title (ownership)
target date for closing (the actual sale)
amount of earnest money deposit accompanying the offer, whether
it's a check, cash or promissory note, and how it's to be returned to
you if the offer is rejected - or kept as damages if you later back out
for no good reason
method by which real estate taxes, rents, fuel, water bills and
utilities payments are to be adjusted (prorated) between buyer and
seller
provisions about who will pay for title insurance, survey, termite
inspections, etc.
type of deed to be given
other requirements specific to your state, which might include a
chance for an attorney to review the contract, disclosure of specific
environmental hazards or other state-specific clauses
a provision that the buyer may make a last-minute walkthrough
inspection of the property just before the closing
a time limit (preferably short) after which the offer will expire
contingencies, which are an extremely important matter and that are
discussed in detail below
Contingencies - “Subject to” Clauses
If your offer says "this offer is contingent upon (or subject to) a certain
event," you're saying that you will only go through with the purchase if
that event occurs. Here are two common contingencies contained in a
purchase offer:
The buyer obtaining specific financing from a lending institution:
If the loan can't be found, the buyer won't be bound by the contract.
A satisfactory report by a home inspector: for example, "within
10 days after acceptance of the offer." The seller must wait 10 days
to see if the inspector submits a report that satisfies the buyer. If
not, the contract would become void. Again, make sure that all the
details are explicitly stated in the written contract.
Negotiating Tips
You're in a strong bargaining position, that is, you look particularly
welcome to a seller, if:
you're an all-cash buyer
you're already have a preapproved mortgage and you don't have a
present house that has to be sold before you can afford to buy
you’re able to close and take possession at a time that is especially
convenient for the seller
In these circumstances, you may be able to negotiate some discount from
the listed price.
On the other hand, in a "hot" seller's market, if the perfect house comes on
the market, you may want to offer the list price (or more) to beat out other
early offers.
It's very helpful to find out why the house is being sold and whether the
seller is under pressure. Keep the following considerations in mind:
every month a vacant house remains unsold represents considerable
extra expense for the seller
if the sellers are divorcing, they may want to sell quickly
estate sales often yield a bargain in return for a prompt deal
Earnest Money
This is a deposit that you give when making an offer on a house. A seller
is understandably suspicious of a written offer that is not accompanied by
a cash deposit to show "good faith." A real estate agent or an attorney
usually holds the deposit, the amount of which varies from community to
community. This will become part of your down payment.
Buyers: the Seller's Response to Your Offer
You will have a binding contract if the seller, upon receiving your written
offer, signs an acceptance just as it stands, unconditionally. The offer
becomes a firm contract as soon as you are notified of acceptance. If the
offer is rejected, that's that - the sellers could not later change their minds
and hold you to it.
If the seller likes everything except the sale price, or the proposed closing
date, or the basement pool table you want left with the property, you may
receive a written counteroffer including the changes the seller prefers.
You are then free to accept it, reject it or even make your own
counteroffer. For example, "We accept the counteroffer with the higher
price, except that we still insist on having the pool table."
Each time either party makes any change in the terms, the other side is
free to accept, reject or counter again. The document becomes a binding
contract only when one party finally signs an unconditional acceptance of
the other side's proposal.
Buyers: Withdrawing an Offer
Can you take back an offer? In most cases the answer is yes, right up until
the moment it is accepted, or even in some cases, if you haven't yet been
notified of acceptance. If you do want to revoke your offer, be sure to do
so only after consulting a lawyer who is experienced in real estate
matters. You don't want to lose your earnest money deposit or find
yourself being sued for damages the seller may have suffered by relying
on your actions.
Sellers: Calculating Your Net Proceeds
When an offer comes in, you can accept it exactly as it stands, refuse it
(seldom a useful response) or make a counteroffer to the buyers with the
changes you want. In evaluating a purchase offer, you should estimate the
amount of cash you'll walk away with when the transaction is complete.
For example, when you're presented with two offers at the same time, you
may discover you're better off accepting the one with the lower sale price
if the other asks you to pay points to the buyer's lending institution.
Once you have a specific proposal before you, calculating net proceeds
becomes simple. From the proposed purchase price you can subtract the
following costs:
payoff amount on present mortgage
any other liens (equity loan, judgments)
broker's commission
legal costs of selling (attorney, escrow agent)
transfer taxes
unpaid property taxes and water and other utility bills
if required by the contract: cost of survey, termite inspection,
buyer's closing costs, repairs, etc.
Your present mortgage lender may maintain an escrow account into
which you deposit money to be used for property tax bills and
homeowner's insurance. In that case, remember that you will receive a
refund of money left in that account, which will add to your proceeds.
Sellers: Counteroffers
When you receive a purchase offer from a would-be buyer, remember that
unless you accept it exactly as it stands, unconditionally, the buyer is free
to walk away. Any change you make in a counteroffer puts you at risk of
losing that chance to sell.
Who pays for what items is often determined by local custom. You can,
however, negotiate with the buyer any agreement you want about who
pays for the following costs:
termite inspection
survey
buyer's closing costs
points paid to the buyer's lender
buyer's broker fees
repairs required by the lender
home protection policy
You may feel some of these costs are none of your business, but many
buyers - particularly first-timer buyers - are short of cash. Helping them
may be the best way to get your home sold.
Buyer's Toolkit - Denver Real Estate and Denver Homes
Welcome to our Denver Division Buyer's Toolkit. We specialize in Denver Real Estate and Denver Homes.
Our tools allow you to review any real estate for sale in Colorado that is listed in the MLS/IDX. Please review or download our Buyer's Toolkit. We have over
70 Free Reports available for review or to download. Seller's Toolkit - Denver Real Estate and Denver Homes
Welcome to our Denver Division Seller's Toolkit. We specialize in Denver Real Estate and Denver Homes.
Our tools allow you to review any real estate for sale in Colorado that is listed in the MLS/IDX. Please review or download our Seller's Toolkit. We have over
70 Free Reports available for review or to download.
Neighborhood Information for Denver Real Estate and Denver Homes
Denver's vibrant metropolitan area full of cultural wonder and entertainment, as well as great
outdoor activities and recreation. Denver also has 300 plus days of sunshine we get each year, it's
no surprise at all, Denver Real Estate is something that everybody wants to own.
Well-Known across the world as the "Mile High City," Denver has been consistently rated as one of the
top places to live and work in the country. Originally built around the convergence of the Platte River
and the Cherry Creek River, Denver's outstanding lifestyle and great climate mixed with a wide array of
growing employment opportunities, have begun to characterize our city in the sky. Nothing beats our
spectacular Rocky Mountain views combined with the typical 150-mile visibility days. Home Owners in the
Denver Real Estate market feel fortunate to live in the beautiful "Mile High City".
Boasting more public parks than any other city its size in the nation, easy travel times to many great
attractions and an endless list of activities available, Denver has been attracting outdoor enthusiasts as
well as large corporations for decades. Six popular professional sports teams make the "Mile High City" home as
well as an award-winning Performing Arts Center complete with a theater and a symphony orchestra. Outdoor
recreational opportunities include world-renown skiing, mountain biking, hiking, fly-fishing, kayaking and
white water rafting, to name just a few. Denver also offers a diverse live music scene with multiple
entertainment venues from the Historic Red Rocks Amphitheater to the classic Fillmore Auditorium on Colfax Street.
The diversity of real estate options and locations in Metro Denver makes finding the right place to call home
easy as well. From the center of the city throughout each of the suburbs, Denver housing features include single
family and luxury homes to upscale lofts and condominiums.
Please allow me to assist you in your future real estate matters. I have up-to-date information available
on all of the Metro Denver Real Estate areas including Highlands Ranch, Cherry Creek, Lone Tree, Ridge Gate,
Centennial, Castle Rock, Castle Pines as well as the classic, more established areas of Denver including Cherry
Hills Village, Greenwood Village, Englewood, Littleton, Ken Caryl, Aurora, Parker ...and all other areas. Be sure
to check out the Interactive Subdivision Map too.
Corporate Office, Denver Colorado - 303 S. Broadway, Suite 200-278, Denver, CO 80209 sales@denverhomeliving.com (303) 816-9199 - Fax:(303) 845-9938, USA
Homes and Lifestyles Realty Office - P.O. Box 5136 Woodland Park, CO 80866 sales@pikespeakhomeliving.com (719) 216-2006 - Fax:(719) 213-2668, USA
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