If you’re in the market to purchase a new home, you want to know how to present a strong purchase offer.
In a hot market, a strong purchase offer could make or break a deal. Most real estate agents use a basic template for composing an offer, therefore you’ll find that the majority of purchase offers include many of the below components.
- Offer Amount: Discuss the amount you believe you should offer with your real estate agent. While the asking price is what the seller wants to walk away with at closing, the price you offer takes various factors into consideration.
- Earnest Money/Deposit: This deposit tells the seller that you’re serious about purchasing their home. While generally between 1% to 3% of the price of the home, your agent might suggest you offer more if you’re buying in a seller’s market. Though you put the money down when you make the offer, it’s credited at time of closing.
- Description of the Property: This includes the description as written on the title. You’ll find full address, property measurements and full description of property boundaries.
- Description of Fixtures and Appliances: This section outlines what household appliances and fixtures will be included in the purchase. It might also include personal items that belong to the seller, including furniture or lawn décor.
- Financing Method: This specifies how the buyer intends on purchasing the home, providing they are not paying cash. The down payment, financing amount, and method of financing is disclosed. Various financing methods include a conventional loan, FHA or VA loan.
- Sewer and Water: This section identifies the sewer and water services. For example, is there town water and sewer? Does it have a septic system? Is there a well on the property?
- Special Assessments: The city or town the property is in can add special assessments. Special assessments include paying for any projects relating to public infrastructure.
Purchase offers often included contingencies.
- Home Inspection: Home inspectors often find problems with the property that were not previously known or disclosed. This contingency allows the buyer to back out of the purchase without penalty, renegotiate the offer price, or request that the seller fix the problem before closing.
- Hazard Inspection: Hazard inspections are recommended under certain circumstances. If you believe there’s a chance of lead paint or if you’re located in an area with frequent insect infestations, it might be wise to pay for a hazard inspection. The contingency protects the buyer and allows them to back out or request that the seller correct the issue.
- Existing Property: Often a buyer is selling an existing property and relying on that sale to purchase a new property. This allows the buyer to back out or change the closing date if needed. As long as this contingency is included, the buyer avoids paying a penalty.
It’s important that your purchase offer is in line with other offers the seller will be receiving. You also want to be sure your offer stands out above the rest. Consider all the advice your agents can offer, especially in regard to offer amount, contingencies and earnest money.