What Buyers and Sellers Should Know About the Offer

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What Buyers and Sellers Should Know About the
Offer
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• The offer is the initiation of formal
  communication about the transaction between
  buyers and sellers of a property. Its a legal
  document that becomes a binding contract once the
  sellers have accepted the offer. The offer is
  also a complicated document that encompasses
  every aspect of the purchase you can imagine.
  Unfortunately, many buyers and sellers dont
  understand the offer, which can lead to problems.

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What the Buyer Needs to Know

• The buyer is the one to initiate the offer on a
  property they are interested in purchasing. In
  essence, it tells the amount and terms of your
  offer, which includes numerous aspects of the
  agreement.
• Purchase price of the property
• When you would like to close
• Terms of the home inspection
• Financing
• Details on the purchase, such as location and
  names of all parties involved in the purchase

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• These broad categories come with many specific
  details which must be attended to ensure the
  closing goes as planned without delays. Your
  realtor will walk you through all of the pages,
  explaining everything as they go. However, you
  should ask questions if you dont understand any
  aspect of the offer.
• Many offers include one or more contingencies,
  which are stipulations that must be met or else
  the contract will no longer be valid. The two
  most common are financing and inspection
  contingencies. In the financing contingency, the
  buyer is allowed a certain number of days to
  obtain financing on the property without being
  penalized.

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• With the inspection contingency, the buyer has a
  right to cancel the contract if the inspection
  shows problems they arent prepared to deal with
  or that the seller refuses to resolve. You are
  usually given a limited time to opt out of the
  contract before these contingencies are no longer
  in effect.
• The seller must provide a clear title, which is
  also stipulated in the offer. This just means
  they prove they are the owner and no one else has
  a right to the property. It also shows no
  outstanding liens or other interested parties
  hold any claim to the property being purchased.

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What the Seller Should Know

• Once the buyer signs the offer, its sent to the
  sellers agent who brings it to the seller. The
  task of the sellers agent is to ensure the
  homeowners understand the terms of the offer.
  Once the owners have had time to review the
  terms, they have three choices
• They can accept the offer as it is
• They can reject the offer
• They can make changes and submit a counter-offer

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• The issue many sellers face is which option is
  the best choice for them. While they may not like
  every detail of the offer, there may be times
  when they should and must accept it as it is.
  This scenario often happens in a buyers market
  when the seller may know this is the only offer
  they will receive.

• More often, the case comes down to whether the
  offer should be rejected or altered. If the
  seller has multiple issues with the offer or the
  buyer is far off from what the seller is willing
  to accept, an outright rejection may be the
  timeliest option. Also, if the seller has
  multiple offers, it doesnt make sense to try to
  save one that doesnt meet their needs.

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• The best case for a counteroffer is when the
  buyer and seller is close in terms, but they have
  a few slight differences. Pricing is often the
  biggest cause of counteroffers. When the prices
  for the seller and buyer are too far apart, a
  counteroffer may not resolve the problem. On the
  other hand, if the seller can offer other
  concessions, such as paying part of the closing
  costs, the pricing difference may be managed
  successfully.
• Other issues include the closing date or lack of
  pre-approval for financing. The seller may want
  to shorten the timeframe the buyer has to get
  approved with a lender to ensure the property
  doesnt stay off the market only to have the
  buyer back out because they couldnt obtain
  financing.

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• The challenge for the seller, when deciding how
  to handle an offer thats not perfect, is to
  determine if its worth working through a
  counter-offer or if an outright rejection will be
  the better choice. In a sellers market where the
  homeowner is likely to receive multiple offers,
  they will have more options and wont feel
  stuck with the first offer they receive. In a
  buyers market or if they have a home that is
  difficult to sell, they may need to expect some
  negotiation in the process.
• Both buyers and sellers must pay attention to the
  terms of the offer and realize that, once signed,
  the offer becomes a contract both parties are
  obligated to follow.

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Questions?More Information?

• Website http//michaelputnam.com
• Michael Putnam
• info_at_michaelputnam.com
• 703-928-6514
• Sources
• http//www.zillow.com/home-buying-guide/real-estat
  e-contract/
• http//www.realtor.com/advice/why-home-offer-rejec
  ted/
• http//michaelputnam.com/buyers-sellers-know-offer
  /