A written proposal is the foundation of a real estate transaction. Therefore, you need to enter into a written contract, which starts with your purchase offer. This proposal not only specifies price, but all the term and conditions of the purchase. There are a variety of standard forms used by agents and bound by both the law and local practice. After the offer is written and signed, it will be presented to the seller by your agent in the presence of the seller’s agent, or by the seller’s agent alone.
What the offer contains
The purchase offer you submit, if accepted as it is written, will become a binding sales contract (known as a purchase agreement). It is important that it contain all the items that will serve as a “blueprint for the final sale.” The purchase offer includes such items as:
- Address and legal description of the property
- Sale price
- Terms: for example, all cash or subject to the buyer obtaining a mortgage for a given amount
- Seller’s promise to provide clear title (ownership)
- Target date for closing
- Amount of earnest money deposit accompanying the offer, and whether it will come in the form of a check or cash. Also included may be the disposition of the deposit should the buyer back out of the deal at a later date.
- 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 other details
- Type of deed to be given
- Other requirements such as disclosure of specific environmental hazards, seismic hazards or other locally-specific clauses
- A provision that the buyer may make a final walk-through inspection of the property just before closing
- Any contingencies