It’s finally here, the big day! You’ve found your dream home and you’re ready to make things official. It’s time for you to take the next step in your home-buying process, it’s time for you to make an offer!

This step is crucial and to be honest, involves some serious paperwork. This is where having a trusted real estate agent by your side will come in handy. Especially since once the seller accepts your offer, the contract will be binding. 

That being said, there are several things you’ll want to consider before submitting your offer. 

It might seem obvious, but you’ll want to make sure you actually understand what you’re signing. 

The majority of real estate agents have a standardized form they use to submit an offer. This form is made up of several key elements: the expiration date of the offer, the purchase price you’re willing to pay, the initial deposit (also known as earnest money,) the down payment amount, the financing terms, the required home inspection, your contingencies, warranties, and finally the fees associated with closing. 

Phew. :wipes brow: that’s a paragraph full of phrases. I know what you’re thinking, “what on earth does all of that mean?!” Let’s break it down!

Expiration Date

The expiration date of the offer  is the amount of time the seller has to consider your offer before it expires. This could be hours, days or weeks after the offer is submitted. That amount of time is up to you and your real estate agent will help you determine how long to give the seller to accept or counter.

Purchase Price 

The purchase price is the total price you’re offering to pay the seller in order to purchase their home from them. 

Initial Deposit

The initial deposit is also known as earnest money. This deposit is a  pre-determined amount given in good faith to the seller to hold while you obtain financing for the mortgage.

Down Payment

The down payment amount is separate from the initial deposit. This it the amount you will be paying in cash as part of the sale. This money is not financed and you’ll need to disclose proof of this down payment to the seller with a bank statement, check, etc. 

Financing Terms

Financing terms are a list of the rate and terms you have to receive from a lender if you’re financing the sale.

Required Home Inspection

Including a home inspection in the offer means you are entitled to have the home professionally inspected for construction defects, home systems functionality, code compliance and general habitability. You can also include provisions for how the buyer must respond to identified problems.

Contingencies

This is the space on the form where you can list out events that would void your offer to purchase – for example, you being unable to get a certain interest rate for financing or the inspection revealing serious structural problems. Your realtor will be able to help you come up with a reasonable list.

Warranties

Confirm that the buyer can provide proof of ownership (with a title) and request any home warranties that you’d like included as part of the sale. These are awesome with newer appliances that have been purchased.

Closing Fees

Fees associated with closing will make clear if you’ll be responsible for paying closing costs and, if so, how much.

Now that we’ve gone over the terminology let’s talk about what happens next! The seller will do one of three things:

Accept your offer.

Reject your offer.

Make a counter-offer stating the terms of the offer that need to change or be added to be acceptable.

If the seller makes a counter-offer, you can accept or reject it, or make your own counter-offer to the new terms. This back-and-forth will go on until both parties are happy with the terms. The offer doesn’t become a binding contract until both parties sign the contract agreeing to the terms.

If you’re in the midst of your home buying process and want  a professional to help you with the legal and financial aspects of buying a home, you’ve come to the right place! 

At Neighbors Home Team we’re always happy to help make your next move an easy one.