The Basics of Making an Offer on a House

Like marriage, home-buying is one part love, one part legal transaction, and it starts with a proposal. When you’re ready to buy a home, you need to make a written offer: Oral promises are not legally enforceable in real estate sales.

Realtors usually have a variety of standard forms (including Residential Purchase Agreements) that are kept up to date with the changing laws. In many states, sellers must comply with certain disclosure, and a Realtor will ensure that they do, as well as answering any questions you may have during the sale.


If you are not working with a Realtor, keep in mind that your purchase offer or contract must conform to state and local laws. State laws vary, and certain provisions may be required in your area.


Besides addressing legal requirements, the proposal should specify price and all other terms and conditions of the purchase. For example, if the sellers said they’d help with $2,000 toward your closing costs, include that in your written offer and in the final contract, or you won’t have grounds for collecting it later.


After the offer is drawn up and signed, it will usually be presented to the seller by your Realtor, by the seller’s Realtor if that’s a different agent, or often by the two together. In a few areas, sales contracts are typically drawn up by the parties’ lawyers.


What to Include in a Home Offer Your purchase offer, if accepted as it stands, will become a binding sales contract, also known as a purchase agreement, an earnest money agreement or a deposit receipt. It’s important, therefore, that the offer contain every element needed to serve as a blueprint for the final sale. These purchase offer should include such things as:


  • Address and sometimes a legal description of the property.
  • Sale price.
  • Terms. For example, this is an all-cash transaction, or the deal is subject to you obtaining a mortgage for a given amount.
  • Seller’s promise to provide clear title (ownership).
  • Target date for closing (the actual sale).
  • Amount of earnest money deposit accompanying the offer; whether it’s a check, cash or a promissory note; and how the earnest money will be returned to you if the offer is rejected — or kept as damages if you back out of the deal for no good reason.
  • Method by which real estate taxes, rents, fuel, water bills and utilities are to be adjusted (prorated) between buyer and seller.
  • Provisions about who will pay for title insurance, survey, termite inspections and the like.
  • Type of deed that will be granted.
  • Other requirements specific to your state, which might include a chance for attorney review of the contract, disclosure of specific environmental hazards or other state-specific clauses.
  • A provision that the buyer may make a last-minute walk-through inspection of the property just before the closing.
  • A time limit (preferably short) after which the offer will expire.
  • Contingencies. These are extremely important matter and discussed in detail below.


Contingencies If your proposal says “This offer is contingent upon (or subject to) a certain event,” you’re saying that you will go through with the purchase only if that event occurs. The following are two common contingencies contained in a purchase offer:


  • Financing. You the buyer must be able to get specific financing from a lending institution. If you can’t secure the loan, you will not be bound by the contract.
  • Home inspection. The property must get a satisfactory report by a home inspector “within 10 days after acceptance of the offer” (for example). The seller must wait 10 days to see if the inspector submits a report that satisfies you. If not, the contract would become void. Again, make sure that all inspection conditions are detailed in the written contract.


Negotiating the Price Is the listed price the right price? A Realtor can give you a Comparative Market Analysis (CMA) of the home’s value, or you can check local listings on to see what similar properties sold for. Based on the home inspection, you might also ask for a lower price or repair contingencies if the home needs fixes.


You’re in a strong bargaining position — meaning you look particularly welcome to a seller — if you:


  • Are an all-cash buyer.
  • Are pre-approved for a mortgage.
  • Don’t have a house that must be sold before you can afford to buy.


In those circumstances, you may be able to negotiate discounts from the listed price. On the other hand, in a hot seller’s market, if the perfect house comes on the market, you may want to offer the full list price (or more) to beat out other early offers.


It’s very helpful to find out why the house is being sold and whether the seller is under pressure. Keep these considerations in mind:


  • Every month a vacant house remains unsold represents considerable expense for the seller.
  • If the sellers are divorcing, they may just want out quickly.
  • Estate sales often yield a bargain in return for a prompt deal.


Earnest Money Earnest money is a deposit that you put down with your offer on a house. A seller is understandably suspicious of a written offer that is not accompanied by a cash deposit to show good faith. A Realtor or an attorney usually holds the deposit. The amount varies from community to community, and it becomes part of your down payment.


Buyers: The Seller’s Response to Your Offer You will have a binding contract if the seller, upon receiving your written offer, signs an acceptance just as it stands, unconditionally. The offer becomes a firm contract as soon as you are notified of acceptance. If the offer is rejected, that’s that. The seller cannot change their mind later and hold you to the deal.


If the seller likes everything except the sale price, or the proposed closing date, or the basement pool table you want left with the property, you may receive a written counteroffer with the seller’s preferred changes. You can accept or reject it or to even make your own counteroffer — for example, “We accept the counteroffer with the higher price, except that we still insist on having the pool table.”


Each time either party makes any change in the terms, the other side is free to accept or reject the offer or counter again. The document becomes a binding contract only when one party finally signs an unconditional acceptance of the other side’s proposal.


Buyers: Withdrawing an Offer Can you take back an offer? In most cases the answer is yes, right up until the moment it is accepted, in some cases even if you haven’t yet been notified of acceptance. If you want to revoke your offer, be sure to do so only after consulting a lawyer who is experienced in real estate matters. You don’t want to lose your earnest money deposit or get sued for damages the seller may have suffered by relying on your actions.


Sellers: Calculating Net Proceeds When an offer comes in, you can accept it exactly as it stands, refuse it (seldom a useful response), or make a counteroffer with the changes you want. In evaluating a purchase offer, you should estimate the amount of cash you’ll walk away with when the transaction is complete. For example, when you’re presented with two offers at once, you may discover you’re better off accepting the one with the lower sale price if the other asks you to pay points to the buyer’s lending institution. Once you have a specific proposal before you, calculating net proceeds becomes simple. From the proposed purchase price you subtract:


  • Payoff amount on present mortgage
  • Any other liens (equity loan, judgments)
  • Broker’s commission
  • Legal costs of selling (attorney, escrow agent)
  • Transfer taxes
  • Unpaid property taxes and water bills
  • If required by the contract: cost of survey, termite inspection, buyer’s closing costs, repairs, etc.


Your present mortgage lender may maintain an escrow account into which you deposit money to pay property tax bills and home owner’s insurance premiums. In that case, remember that you will receive a refund of money left in that account, which will add to your proceeds.


Sellers: Counteroffers When you receive a purchase offer from a would-be buyer, remember that unless you accept it exactly as it stands, unconditionally, the buyer will be free to walk away. Any change you make in a counteroffer puts you at risk of losing that chance to sell. Who pays for what items is often determined by local custom. You can, however, arrive at any agreement you and the buyers want about who pays for the following:


  • Termite inspection
  • Survey
  • Buyer’s closing costs
  • Points to the buyer’s lender
  • Buyer’s broker
  • Repairs required by the lender
  • Home protection policy


You may feel some of these costs are not your responsibility, but many buyers — particularly first-timers — are short of cash. Helping them may be the best way to get your home sold.


Whether you’re buying or selling, make sure your Realtor and/or your attorney evaluates all terms in the offer and counteroffers. As soon as both parties accept the written offer, you have a legal contract.



Raised and educated in the Bay Area, I have an unique insights and perspective on the area. As a Mother I have first-hand knowledge of the local school systems, as well as recreational and business opportunities. My clients' satisfaction is my ultimate goal, and my genuine love of people makes a personal approach to service the key to fulfilling Real Estate dreams Whether buying or selling, I am committed to meeting my client's expectations. I understand that buying or selling a house can be a stressful time. With my expert knowledge of the real estate process, I am able to guide my clients and relieve some of the stress. I love what I do, and I am dedicated to providing professional service with honestly and integrity. My mission is not complete unless my clients are happy. Please contact me if there is anything I can do to help you.

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