Tips for Writing a Real Estate Purchase Offer

Avoid Offer Rejection in Any Real Estate Market

Sometimes buyers can get so excited about finding the perfect home that they don't really think too much about what comes next — writing that purchase offer. The quality of your offer is almost as important as how much you're willing to pay for the home.

Poorly written offers lessen the chances that buyers will get their offers accepted. Follow some basic steps to get it done right. 

Use the Correct Form

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Make sure you use the right form. This might seem elementary but these documents are not one-size-fits-all. A lot of different kinds of purchase contracts are available and each state has its own laws for them.

You might need a manufactured home purchase agreement or one designed for a new construction residential purchase. Then there are more generic residential purchase agreements and residential income property purchases agreements. Your state might have a separate agreement form for vacant land or for properties that are in ​probate

The good news is that local realtor associations typically publish a variety of purchase contracts.  

Determine the Price

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Some courts have ruled that offers that include acceleration clauses like "I will pay $1,000 more than your best offer" do not constitute bona fide offers. You have a price in mind and you must put it in writing.

Barring extreme buyers' markets or sizzling sellers' markets, you'll probably want to offer a bit less than you expect to pay. You can ask for guidance but don't expect your real estate agent to name a price for you. That's up to you. 

Make an Initial Deposit on that Offer

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Most states require that you make an earnest money or good faith deposit to create a binding purchase offer. It might be cash, a personal check or a cashier's check. It might even personal property, real property, a mortgage, or an unsecured promissory note. But it has to be something of set value. 

Spell out who will hold the deposit — almost anybody but the seller!

Keep in mind that the seller might be entitled to retain your deposit if you decide you don't want the property after all and you default under the terms of the contract.

Disclose your Down Payment

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You'll also have to tell the seller how you're going to make your down payment on the property, whether it be in cash, with a promissory note, stocks, real estate, or other assets. Generally, however, buyers make their down payments in readily available cash.

Some states require verification of your down payment within a certain time period. If you're selling an asset such as liquidation of a mutual fund to raise the cash, that action could be considered a contingency of the transaction and, if so, you should disclose it.

Name Your Financing Terms

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Your deposit, your down payment, and your financing should equal the total consideration you're paying for the property. Some contracts allow you to specify a maximum interest rate as well, giving you a way to cancel the deal if your interest rate comes in higher when you qualify for a mortgage.

Disclose the type of financing you hope to obtain: conventional, FHA, VA, contract of sale, or assumption. Include maximum points, especially if you're asking the seller to pay them.

Include Contingencies

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Most states' purchase contracts give buyers a certain number of days to have the property inspected. Federal law gives all buyers 10 days to inspect for lead paint unless this right is waived in writing. Many contracts additionally carry provisions for such contingencies as a satisfactory appraisal and loan funding.

Depending on your state, these contingencies can still be in effect all the way through closing if you don't remove them in writing. It's important that you include any and all of them in your purchase contract. 


Address Possession — in Detail

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More battles are fought over possession of a property than you might imagine. Some deals fall apart because sellers and buyers have unreasonable expectations about when the buyer will take the property. When exactly can you expect to move in? 

Spell out the possession date in the purchase contract. Is it on the day of closing? A day after closing?

If it's going to be prior to closing, you might want to execute a rental agreement, too, to protect all parties. You'll want to do the same to protect yourself as the buyer if possession is going to be more than two or three days after closing. 

Spell Out Who Pays the Fees

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Although fees are negotiable in most contracts, some are customarily paid by one party or the other. It can depend on your locale. You might unintentionally invite a counteroffer if you don't know local custom. 

Call the listing agent before you write the offer and ask about the norm in your area. Sometimes fees for title, escrow, and county or city transfer taxes can equal 1 to 2 percent of the sales price.

If the seller is paying for the title and it's customary for the seller to choose, let her choose.

Request Special Reports

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Request a report if you're concerned about a specific inspection. Few disputes irritate sellers more than to find out halfway through a transaction that the buyer had a concern that was not addressed upfront. Sellers feel duped and buyers feel misled.

Address all the issues you want ​to be discovered. Some states allow the buyer to conduct all inspections before writing the offer just to alleviate this type of miscommunication. If it's customary for a seller to provide certain reports, ask for them.

Clearly State the Expiration of Your Offer

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Deals sometimes fall through because buyers don't allot enough time for sellers to respond to their offers. Call the listing agent and ask how much time is realistically required. Sellers might be out of town or be dealing with emergencies.

Clarify to whom the accepted offer should be delivered. If it's the buyer and the buyer isn't available to accept delivery, the buyer could lose the transaction if another offer pops up out of nowhere.

It's also a good idea to read your state's contract laws regarding offer expiration.

Now Check It and Check It Again

You're not quite done yet.

It's human nature to be turned off by sloppiness, and you want your offer accepted. So go over it for typos, spelling, and grammar. Better yet, ask someone else to do it, too. A second pair of eyes never hurts.

And while you're at it, review the provisions you've included. Are you really OK with all of them? Remember, this will turn into a binding contract if the seller accepts it so make sure you're comfortable with all the provisions your offer contains.