Making an Offer

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Once you’ve found the right home, this is where this stuff gets really serious and why it’s in your best interest having a real estate professional on your side. You are now in the realm of legal documents, signatures, time limits and potential liabilities.

Prior to writing up the actual contract, you should make sure you have a copy of the Seller’s Property Disclosure Form. This will ensure that you are aware of all the technical details of the home, such as age of roof and if there has ever been any repairs on plumbing. It also defines what items stay and what doesn’t. Be aware that homes owned by a bank (foreclosure) or by a relocation company will normally not offer this form since they have never been inside this property and therefore, can make no disclosure as to it’s condition.

At this point, your REALTOR® will complete the Purchase and Sale Agreement for you and should review with you each section of this contract. Once again, this is a legal document you are signing. There has been some issues regarding the fact that real estate licensees can handle these contracts. In some states, the real estate agent must turn you over to an attorney at this point. The legal world did concede that we are allowed to fill in the blanks of a properly written contract. The Georgia Association of REALTORS® took care of that for us. As members of the association, we have access to pre-written contracts drawn up by attorneys and designed to meet the needs of most situations. In any case, you need to be aware of what is actually said within the pages of the document. Your agent should be able to explain all areas.

Also, you may want to ask for a copy of the Homeowner’s CLUE Report to ensure the house is insurable. CLUE Reports are like credit reports only about the property itself and the number of claims made on it. For more information on CLUE Reports, click here. Knowing all this up front allows you to make an informed purchasing decision.

Within this contract, there are clauses and stipulations designed to specify your wishes, prevent any vagueness and protect all parties involved. As a Client, your Agent should be able to advise you and make certain recommendations on how to best proceed based on your unique needs and buying position. If you are working with the agent as a customer, then it is purely YOUR responsibility to make sure your best interests are protected.

In the State of Georgia, when you make your purchase offer, you establish the terms by which you will buy this property, including:

How much you are willing to pay
How much earnest money you are able to put down. This is held in an escrow account and credited to you at closing. It shows the Seller that you are “earnest” in your intent.. hence the name!
Who will act as Closing Attorney
How much closing cost contribution you are requesting of your Seller. This is more determined by local customs than anything else. In some markets, it is common for Sellers to help with closing costs. In others, not so. Ask your Agent for the best way to handle this.
When you want to close and take possession
As of 2008, Buyers can take homes in one of two ways: Subject to Due Diligence or As Is. What about repairs, you might ask? Under due diligence, the Buyer sets a number of days during which they are able to make all inspections. If there are issues, you can submit an Amendment to Address Concerns with Property – in which you can ask for certain repairs or anything else. During this time, also, it is incumbent upon the Buyer to get COMPLETELY approved for financing – that means that at the end of the period, your loan must be fully confirmed and in place. Once due diligence is over, there is technically no turning back! During this time, for any reason, you may terminate the contract! Once the time period is over, you are now obligated to buy the property or risk losing your earnest money and possible legal action by the Seller due to Breach of Contract. Make sure your Agent explains all this carefully to you.
Whether or not the offer is contingent upon appraisal. Previously, if the appraisal came in less than purchase price, the Buyer was allowed to terminate. Today, the Buyer MUST first renegotiate the price to the appraised price. If the Seller agrees, everything continues. If the Seller declines, then the Buyer has the right to terminate.
Time limit to the Seller for a response on this offer
You can also place special stipulations into the contract – making certain requests. Your agent must take special care when writing these because poorly worded stipulations that leave something ambiguous or unclear can jeopardize the contract later.
What other supporting documents are included with this offer. Your agent can walk you through any additional exhibits or addenda you may need for your particular situation. If you’re not taking possession immediately, you may want to complete a “Temporary Occupancy Agreement” which spells out the date, time and other related terms for the actual possession date. If you have a home to sell prior to closing on this one, you may need to use a contingency contract etc.

Most people think the hard part of buying a home is finding one. Once through the process, most will agree that the contract part is more challenging… and once your agent submits your offer, that’s when the real work begins. Here’s why…

The Listing Agent takes your offer and presents it to his/her Sellers. The Sellers can do one of several things, such as:

Accept the contract with no changes by simply signing the bottom of the contract and stating date and time of acceptance and notifying your Agent of the acceptance.
Make a Counter-Offer. If the Sellers find the contract essentially acceptable with the exception of a few points, most commonly, the sales price, closing cost contribution or other special stipulations/requests which the Buyers may have placed in the contract, they can ‘counter’ and make an offer of their own. No changes can be physically made to the original. A Counter-Offer form must be completed stating those changes which the Sellers wish to make.
Nothing at all. If the Sellers don’t like your offer, they can simply choose to do nothing and let the time limit lapse. Why not make a counter-offer? This happens frequently with people who are receiving multiple offers and they make a counter-offer on another Buyer’s offer and let yours lapse. In some cases, it happens when a Buyer offers way below the asking price and ‘insults‘ the Seller. As a response, they choose not justify the insult with a counter. You have to be careful how low you offer. Sometimes, you may insult them and then get shut out altogether.

If the Sellers choose to counter your original offer, this is where the negotiating skills of a good REALTOR® pays off. Your Agent can advise you on how to respond back to the Counter-Offer. You can work together on an appropriate response. She may also recommend to you that it’s a solid counter and that you should accept. She may recommend that you should count this offer with one of your own. She may be able to recommend ways to work around the Seller’s own demands while making sure the ultimate advantage is on your side.

Working with these situations on a regular basis, REALTORS® usually have a good idea of how people will respond to certain demands or situations. Your REALTOR® should be able to prepare you to help you anticipate the response of the Seller to any requests. There are a lot of phone calls, follow-up and touching base going on here, all under strict time limits, and having the assistance of a REALTOR® to handle these details and the legwork is a great time saver if you have other things that need your attention, such as work and family.

A skilled Agent can prove helpful in other ways. She may see red flags on the contract due to ambiguity of the verbage that may lead to problems later. She may find certain flaws in the completion of the contract that may later be used as a loophole or void the contract altogether. She may find that certain necessary documentation that should be included isn’t. She may be able to get additional perks for you in the deal and make suggestions on how to maximize your position to get you the best price and overall terms. As a Client, this is all part of your Agent’s duties to you, to protect you and ensure you are getting a solid, viable, executable deal.