Finding the house of your dreams is the fun part of the real estate journey. The less fun part is writing the offer itself. It may not seem like an intimidating task at first, but first you have to learn how to write an offer for a house.
The idea of writing an offer can lead to thinking you just need to write the price and the job will be done. But an offer to purchase demands much more. You have to provide other information to complete the offer and make it valid.
A poorly written offer to purchase can lower your chances of getting the house. Also, the offer needs to comply with certain rules and laws.
If you want to seize the opportunity and purchase the house, you’ll need a well-written offer. The following tips will provide you with the basics on how to write a proper offer to purchase a house.
Securing your dream home starts with the right offer. Discover the strategies and steps in our guide on how to put in an offer for a house and set yourself up for success.
Set a Specific Price
Firstly, you need to settle on purchase price you’ll be comfortable with.
Speak to your real estate agent about your financial situation as well as other buyers that might also be showing interest in the home.
Your real estate agent will be able to advise on a good offer on a house which the seller will seriously consider.
Escalation Clauses
Some legal issues can arise if your offer includes escalation clauses. What is an escalation clause? The escalation clause signals a potential change in the contract if a certain factor affects the value of the real estate.
For example, “I will pay $700 more than your best offer” is an escalation clause.
While it may be tempting to propose something like this in the sale contract, avoid such fluctuating agreements and specify the price. You’re more likely to appear like a serious buyer that way.
Determine the Deposit Amount
An earnest money deposit proves that you are serious about the offer and that you plan to come through. However, what sometimes causes confusion is how much the deposit should be.
Most real estate agents will recommend keeping the deposit under 2% of the offered price. The reason why is that a bigger deposit can entice the seller to ask for proof of the source of those funds.
If you have a short escrow time, you’ll be losing the time you don’t have on gathering documents.
Additionally, specify who the reputable third party is who will withhold the deposit.
Disclose the Size of Your Down Payment
Write in the agreement the amount of the down payment as well as the form in which you plan to pay it. This will further prove that you are serious about purchasing the house.
In addition, it will be easier for you to get a home loan if you make a bigger down payment.
Include Contingencies
Protect yourself from any unpleasant changes with contingencies. Contingencies give you the right to cancel the agreement without penalty if certain things go wrong.
For example, a contingency can be that the house must pass all the inspections, or that the seller needs to close his/her own sale before the offer is finalised.
Overall, contingencies anticipate potential problems and keep you safe from finding yourself in a troubling situation.
Set the Closing Date
The closing date is an essential element of an offer to purchase a house. When setting the closing date consider when you need to move out from the current place of residence. Make this transition as smooth as possible.
Write Down the Transfer of Possessions Date
To avoid confusion and misunderstanding about when exactly will you move in, spell it out in the offer. You and the seller could get a different idea of the date for the transfer of possession. Or, the seller might try to prolong the date by claiming that you said you’ll move in later than you currently claim.
Ensure that you don’t have to deal with such unpleasant arguments. Specify the date of transfer of possessions and you’ll be all set.
Disclose the Financing Details
The seller should be informed about your financing plans. Providing more details on how you’ll pay for the property ensures transparent transfer. Moreover, if you’ll ask the seller to pay the mortgage points, include them in the offer.
Be Open about the Requested Inspections
State in the offer any type of inspections or reports that must be performed prior to making the purchase. Aside from the typical termite inspection, you can ask for a different type of assessment as long as you write it in the offer. Therefore, if the seller accepts the offer, the inspections will have to be carried out without protest.
Specify Who Will Cover the Costs
In some instances, the seller is willing to pay some closing costs or buy down your interest rate temporarily (for a year or two). If you made an oral agreement on this matter put these conditions in writing.
In case you haven’t made such an agreement but it is a necessary condition for you, again specify it in the offer. The seller should know upfront what you expect from them.
Write Down Who Will Pay the Fees
Even though the fees are mostly negotiable, certain customs expect one party or another to cover the fees. Before you write the offer, discuss with your listing real estate agent about the fee customs in your local area. Not respecting the local practice can lead to a counteroffer.
Inform Yourself and State Additional Clauses
Depending on your state and its laws, the offer can demand the inclusion of additional clauses. Your state might require a legal description of the property, for example. You also might want to include any items or appliances that the seller claimed to be included in the sale.
Proofread and Edit
Before you present your offer to the seller, make sure that you have created a comprehensible and error-free offer. If you need some help with editing your offer to improve readability, apps like Grammarly should be able to help you out.
Strategic Moves: Contemplating a real estate bid at a house auction? Discover the pros and cons of making an offer before the auction in our thorough guide.
Final Thoughts
Take your time to write the offer to purchase a house. You don’t want to miss any important details. Inquire yourself about the local laws and put in writing any oral agreement between you and the seller. If you are uncertain about the offer, you can ask a real estate attorney to review the offer before you submit it.
