Types Of Offers

Assuming you've priced your house near the fair market value and your Realtor is working hard to spread the word, you should expect to receive an offer (or even multiple offers, in a perfect world). Offers arrive by way of a legal document called the Offer to Purchase. The Offer to Purchase specifies the price the buyer is willing to pay, details about the property and financing, as well as any conditions, exclusions or inclusions the buyer wants to be contingent on the closing. Typically it is presented to you by the buyer's agent. Your real estate agent should also be present.

The offer can be firm or conditional:

Firm offer to purchase: This is usually preferable to the seller, because it means that the buyer is prepared to purchase the home without any conditions. If you accept the offer, congratulations! Your house is sold.

Conditional offer to purchase: This means that the buyer has placed one or more conditions on the purchase. Common conditions make the completion of the sale subject to a clean home inspection, subject to financing approval, or subject to the sale of the buyer's existing home. The house is not sold until all the conditions have been met.

Be sure to review the purchase offer carefully, and make sure you understand and agree to all the terms before you sign. It's important to note that a signed offer is a binding contract.

Some of the elements that make up the offer to purchase:

Terms - Terms include the total price offered and the financing details. The buyer can arrange their own financing or ask to assume your mortgage (especially if it has an attractive interest rate).

Deposit - The deposit shows the buyer's good faith and will be applied against the purchase price of the house when the sale closes.

Conditions - Conditions are items that must be completed or fulfilled prior to the closing (such as a home inspection, obtaining financing, or selling your existing house). The buyer will list anything they want you to pay for – carpet cleaning, warranties and any repairs or credits for damages, etc.

Inclusions and exclusions - The offer may be contingent on certain items being either included or excluded in the sale. These items can be anything from appliances to decorative items, such as window coverings or mirrors (these are called chattels).

Closing day (or possession date) - The closing day is generally the day the title of the property is legally transferred and the transaction of funds finalized, unless otherwise specified.

If there are terms in the buyer's offer to purchase that you don't agree with, you may choose to make a counter offer (or even outright reject the buyer's offer). Often the seller and buyer will have to negotiate to arrive at terms that both parties find agreeable.

When the negotiations are finalized and all the terms are agreed upon, your Realtor usually prepares a copy of the agreement of purchase and sale showing the final terms for you to sign. Careful attention to detail and consideration of the buyer's point of view should result in a successful home purchase!

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