So, you are about to make an offer on your dream home....Oral agreements are not enforceable when dealing with real estate so a contract must be prepared by your realtor. Standard forms are available and your realtor will prepare this for you. If you are not using a realtor (which I wouldn’t recommend) you can prepare the contract yourself but keep in mind that it must conform to state laws. Are there any appliances that would like to include in the contract? You will need to include these in your contract too.
If you add to your contract – ‘subject to’. This means that you will only go ahead with the offer if certain conditions are met. The two most common conditions (or contingencies) are if the buyer cannot obtain financing or if the inspection turns up something that has made you decide to withdraw your offer. We had an incident in our office today where we had a buyer ready to make an offer on a foreclosure with a contingency that they sell their home first. Unfortunately, a bank will not accept this contingency and so the buyer was unable to proceed.
It is strongly recommended that you have the house inspected by a professional home inspector. The items that the inspector flags as problems may be minor, and be a small expense to fix but you’ll want to be sure to have as many things done as possible, because if you don’t you may then have pay for the very same repairs when you try to sell the house in the future. When we made an offer on our home, the inspector said that the rain gutters should be extended to the edge of the roof or after a period of time, it would cause wear and tear to the roof. On his recommendation, we did include this in the contract and it was fixed by the seller. It seemed a minor thing at the time, but repairing a roof can be very costly, so we are glad that we did follow his advice. The lender might not approve the mortgage is the problems are of a larger nature e.g. foundation repairs or roof problems. This website has a bunch of useful information as well as a directory of inspectors in your state. http://www.americanhomeinspectordirectory.com/
At the time you submit your offer, you also pay your earnest money. This is usually $500-$1000 and shows the seller that you are serious about your offer. This money will be applied towards the purchase price if the deal goes through and is held by an escrow agent. You will usually get this money refunded to you if the deal falls through unless you default on the contract for any reason. An example of this could be if you didn’t get the house inspected in the timeframe that was specified in the contract.
Check out this great website for more information:
http://homebuying.about.com/od/buyingahome/qt/062907HomeOffer.htm
next blog .. counter offers.
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