Making An Offer

The Basics Of Making An Offer

A written proposal is the foundation of a real estate transaction. Therefore, you need to enter into a written contract, which starts with your purchase offer. This proposal not only specifies price, but all the term and conditions of the purchase. There are a variety of standard forms used by agents and bound by both the law and local practice. After the offer is written and signed, it will be presented to the seller by us in the presence of the seller’s agent, or by the seller’s agent alone.

What the offer contains

The purchase offer you submit, if accepted as it is written, will become a binding sales contract (known as a purchase agreement). It is important that it contain all the items that will serve as a "blueprint for the final sale." The purchase offer includes such items as:

• Address and legal description of the property
• Sale price
• Terms: for example, all cash or subject to the buyer obtaining a mortgage for a given amount
• Seller’s promise to provide clear title (ownership)
• Closing and possession dates
• Amount of earnest money deposit accompanying the offer, and whether it will come in the form of a check or cash. 
• Method by which real estate taxes, rents, fuel, water bills and utilities are to be adjusted (prorated) between buyer and seller
• A provision that the buyer may make a final walk-through inspection of the property just before closing
• Any contingencies

The Purchase Agreement

We will use a standard form of Purchase Agreement, developed by the Kansas City Reagional Association of Realtors ®.  You can make changes – but the seller must agree to each of the changes you make. In the United States, oral contracts are not enforceable – real estate contracts must be in writing. Even if you give us, your agents, permission to bargain on your behalf, we must have a purchase agreement signed by all buyers before we can present your offer.

When you read the Purchase Agreement, try to imagine yourself as an independent party who has no knowledge of the transaction other than what’s included in the contract. Is the meaning of each clause clear? For example, to avoid miscommunication list all personal property you expect to be included in the transaction. Also, it’s a good idea to stipulate the exact date and time of possession – if you’re not specific, you and your moving van could arrive and find that the seller still inside the home!

Elements in the Purchase Agreement

• Sales Price
• Earnest money
• Title
• Mortgage Clause
• Inspections
• Other Disclosure and Inspection Terms
• Contingencies
• Title Company
• Closing Costs
• Closing & possession dates

The seller’s response to the offer

You will have a binding contract if the seller, upon receiving the written offer, signs an acceptance just as it stands, unconditionally. The offer becomes a firm contract as soon as the signed offer is delivered to you or me, your agent. If the offer is rejected, then the offer is no longer valid. If the seller likes everything except the sale price, or the proposed closing date, or the terms of your offer, you may receive a written counteroffer, with the changes the seller prefers. You are then free to accept or reject the counteroffer, or even to make your own counteroffer.Each time either party makes any change in the terms, the other side is free to accept or reject it, or counter again. The document becomes a binding contract only when one party finally signs an unconditional acceptance of the other side’s proposal and that final, unchanged document is delivered to the other party or their agent.

How the seller may counteroffer

The buyer and seller can negotiate and agree about any of the terms, conditions, costs and who pays for them. Some terms and conditions that are negotiable include:

• Repairs required by the lender
• Termite inspection fee and costs to repair any damage
• Closing costs
• Points to the buyer’s lender
• Buyer’s broker commissions
• Repairs of conditions or defects disclosed by the seller, uncovered by inspectors, or required by governmental agencies
• Closing date
• Possession date

What You Need To Know

Seller's disclosure of material facts

The seller of your property is required by law to disclose all material facts known about the property. This is typically done using a document titled "Seller's disclosure and condition of property addendum" in which the seller will make known to you important disclosures about that property, including any known existing conditions, any hazards or nuisances. For example, if the property drains improperly or if there are cracks in the chimney and the seller knows about it, he or she is required to let you know via the disclosure form.

Home Inspection Report

Just as important as the Seller's disclosure is the home inspection report. While the disclosure documents the property’s condition, to the knowledge of the seller, a home inspection will provide you with the additional insight of a competent expert.Your home inspector will provide you with a written report, which will advise you of the physical condition of the property as determined from the inspection of accessible areas. The report also will identify areas that could not be inspected and may recommend additional inspections by other experts in areas including roofs, foundations, soils, drainage or pools. Less usual, but also recommended from time to time, are inspections for health-related risks such as radon gas, asbestos or problems with water or waste disposal systems. While additional inspections will cost more money, they definitely are worth it if they uncover an expensive defect in the property.

A general inspector will focus on the structure, construction, and mechanical systems of the house, and will make you aware only of repairs that are needed. Generally, an inspector checks the electrical system, plumbing and waste disposal, the water heater, insulation and ventilation, heating and cooling systems, water source and quality, the foundation, doors, windows, ceilings, walls, floors, and roof.

The inspector does not evaluate whether or not you're getting good value for your money.

Usually, there will be an inspection clause in the contract. Sometimes, the seller will provide a report of a home inspection paid for by the seller. If conditions or defects are disclosed in the report you can:

1. Negotiate for the seller to fix the problems prior to close date

2. Receive a credit from the seller for an amount to make the repairs; or

3. Cancel the contract if your and the seller cannot agree on the repairs or their costs.

It’s not required that you attend the inspection, but it's a good idea and we strongly recommend that you do, since generally you will learn a great deal about your property. The inspection also provides a great opportunity to hear an objective opinion on the home you would like to purchase and it is a good time to ask general, maintenance questions of an expert.

Pest Control Inspection Report

While within the inspection period specified in your purchase agreement, you should have the property inspected for wood destroying insects. In most cases where a mortgage is involved in a home purchas, a mortgage lender will require a "clear" wood destroying insects report.