Congratulations! You’re preparing to make an offer. Although your agent and Landed point person will look through your offer details, we want you to feel empowered with the information you need throughout the offer process. Below, we cover a few key components of putting together an offer.
After visiting a few open houses, you may have found the one you are ready to call home. You will work with your agent to draft an offer package to submit. Here are some things you may want to pay close attention to and discuss with your agent as you prepare your offer:
1. Offer price: This is one of the most important pieces of your offer package. While it is ultimately your decision, your agent can give you their best recommendation for what price they believe the home will sell for based on their knowledge of the market and recent nearby sales.
2. Prepare for a counter offer: In the event that a seller is interested in your offer, but wants you to change some of the terms of your contract, you may receive a counteroffer. This will include a list of required changes (sometimes called addendums) from the seller prior to accepting your offer. Talk to your agent about what you may or may not be willing to do (i.e., increase price point, close on the home more quickly, etc.).
3. Understand closing: Your offer will include your closing timeline. This is important because you as a buyer need to feel confident in your ability to have the funds deposited into escrow/title by the closing date. In the event that does not happen, there may be financial consequences for each day the closing is postponed. Also, you need to feel comfortable about the timeline you may have to remove specific contingencies included in your offer.
4. Be aware of the small details: There are many small details that are incorporated into an offer, such as specific fixtures that are expected to remain in the home (i.e., a chandelier that really brightens the dining room). Later, as you learn more about the property, you might want to think about negotiating down the purchase price or seller credits in lieu of the seller completing certain necessary home repairs on their own prior to closing. Lastly, understand who is paying for different closing costs, taxes, and fees.
5. Consider contingencies: Contingencies are conditions that must be met for the offer to go through. We always encourage buyers to consider contingencies. The three main types of contingencies are loan, appraisal and inspection contingencies. If you do not include contingencies and you back out of an offer, you may lose your initial deposit.
Feel free to reach out to your Landed point person if you have any questions regarding writing an offer. Good luck!
Offer Process: Key Terms
Offer
An offer on a property is a conditional proposal made by a buyer or seller. Your offer as a buyer will include an offer price, contingencies (conditions), potential support letters, and a pre-approval (especially in a competitive market).
Contingency Clauses
These are conditions or actions that must be met for a contract to be binding. Buyers will often put certain contingencies in place that the seller must meet during the closing process. If a contingency is not met, a buyer can back out of the contract without losing earnest money.
Counteroffer
A counteroffer is a proposal by the seller letting a buyer know their offer may be accepted if they are able to make change(s) to their offer. A seller may ask for a larger deposit, removal of contingencies, or other changes.
Addendum
An addendum is a document added to a contract outlining changes made to the original offer. For each change, you will add on an addendum signed by both parties involved in the purchase agreement.
Ratified Purchase Agreement
Sometimes called a ratified contract, this is the contract in which terms have been agreed upon by all parties. After signing this agreement, both parties can start the closing process.
Earnest Money
Earnest money is the money you pay to the seller of a home once an offer is accepted and a ratified purchase agreement has been signed. This money is typically held in an escrow account. This deposit represents a buyer’s good faith to buy a home, while giving both parties time to conduct necessary inspections and/or repairs. This money will be counted toward your total down payment funds period.
