The Massachusetts Offer to Purchase Real Estate - A Legally Binding Contract
Massachusetts home buyers soon discover that buying a home in Massachusetts involves a two-part process. The first part is the Offer to Purchase. The second is the Purchase and Sale Agreement.
When you eventually find that perfect home, it is the job of your Realtor® to write up the Offer to Purchase. This is done, usually by hand, on the pre-printed form from the Greater Boston Real Estate Board.
It is crucial to understand that the Offer to Purchase, although not typically written by an attorney is, in fact, a legally binding contract. Some people are under the assumption that since the Purchase and Sale Agreement is the actual contract to purchase the home that the Offer to Purchase is merely a formality. It is important to understand that this is simply not the case.
Elements of the Offer
- Purchase price and deposit - the deposit is typically $500 to $1,000 with the offer, plus an additional deposit at the signing the Purchase and Sale Agreement. This additional deposit is usually equal to 5% of the purchase price.
- The timing for the signing of the Purchase and Sale Agreement - usually 7 to 12 days.
- An adequate time for a home inspection - including pest, radon, water (if private water.) The average time for this is one week or less.
- The amount and time allowed for the mortgage financing contingency. This is to protect your deposit in the event that you are turned down for financing by your lending institution. As a buyer, you want to allow yourself an adequate amount of time for this. It is best to consult your bank to find out how much time they will need to do your loan. The seller will want to keep this as short as possible. Make sure that you allow as much time as you will need for your mortgage contingency.
- The specific appliances and any personal property that will be included in the sale.
- Title V septic contingency - If the home is on a private septic system the seller must provide you with evidence of a Title V inspection and certification.
- Condo documents and budget - If you are purchasing a condominium the offer should be contingent on review of the condo documents and the budget for the complex.
The formal purchase of a home in Massachusetts begins with the Offer to Purchase. This step needs to be written correctly, carefully reviewed and, most importantly, understood by all parties.
Copyright 2010 "Massachusetts Offer to Purchase Real Estate - A Legally Binding Contract"
Claudette Millette, Broker, Owner, The Buyers' Counsel - (508) 881-6230