You’ve found a house and it’s time to see if the seller will agree to the terms you need in order for you to be able to go through with the purchase. Writing a contract essentially means you are making an offer to purchase the seller’s house under certain terms. If the seller agrees to those terms, you are ready to move forward. You are working towards what is called the meeting of the minds, which means you and the seller agree to terms and have signed off on them. There is no such thing as a verbal agreement in real estate, so once you have agreed, get the signatures as quickly as possible.
You and your agent should look at the comparable properties in the neighborhood before writing the offer so you can have a good idea what the property is worth. (Comparable properties are sold and presently for sale properties) (Insert link). When you are negotiating the contract, there are certain items that you must have or the deal won’t work, and there are items that you can give. For example, you may need closing costs but can give on price. Remember-your goal is to find out what the seller’s bottom line is. If their bottom line is acceptable to you, then you go for it.
The contract should include these contingencies (the contract is subject to these conditions):
- Financing of your choice, including seller paid closing costs, pre-paids and other fee’s if agreed upon.
- Inspection of the property by inspectors of your choice
- Closing date and closing at the title company of your choice.
- Satisfactory ability to get title, property boundaries and easements.
- What’s included and excluded from the sale of the property
You don’t have to worry about these clauses if you use a standard REALTORS® contract. They are already built in. What you have to worry most about is getting the seller to agree to the terms you need for your loan. If you don’t have much money and need the seller’s help to ease your closing costs, pre-paids and inspections, then they are a non-negotiable item. If you have to use a certain type of loan such as FHA then you cannot accept terms less than that. THAT’S WHY YOU GOT PRE-APPROVED FOR YOUR LOAN. When you get to this point you should know exactly what you need to move forward, financially speaking.
Your agent should be helping you extensively through this process. Their experience is invaluable and mistakes are expensive. Next, you submit the offer to the seller and give them a response time, usually within 24 hours with the exception of short sales (they make take a month to get a response) and bank owned foreclosures (which may take a week). During the time you are negotiating, the seller can entertain any other offer that may show up on the table. In addition, either party can notify the other party that they are rescinding a counter-offer as long as they have not been notified that the other party has accepted the terms offered.
You will be anxious when you write the offer and may not sleep well. It’s ok. If you did your homework you’ll be in good shape. If you need any help email me at [email protected]
You can also learn more about writing a contract.