What the Offer Contains
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.) It's important, therefore, that it contains all the items that will serve as a "blueprint for the final sale." These purchase offer items include such things as:
- Address (sometimes legal description) of the property
- Sale price
- Terms (all cash or subject to your 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, and 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 are to be adjusted (prorated) between buyer and seller
- Provisions about who will pay for title insurance, survey, termite inspections and the like
- Type of deed to be given
- Other requirements specific to your state, which might include a chance for attorney review of the contract, disclosure of specific environmental hazards, or other state-specific clauses
- A provision that the buyer may make a last-minute walk-through 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 discussed in detail below)
Contingencies
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.
The following are some 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 "within 10 days after acceptance of the offer." For example, 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 nailed down in the written contract.
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