After countless hours shopping; scouring every online real estate site available (just in case you missed something better out there), disappointing drive bys, in person showings, last minute second guessing and finally.....you're ready to write an offer!
Cool! What's next?
You make an offer, which means your agent will prepare the purchase contract based on the price, and terms you've approved.
Make no mistake, this is a contract!
The verbiage and terms of these pre-printed forms have been carefully reviewed and edited by attorneys.
You're going to sign this contract prior to your agent sending it to to the seller's agent for review.
Read the contract you are signing!
Or, at a minimum, make sure you understand the terms. There will be time frames, "outs", consequences for not performing, and conditions which will kick in based on this, that, or the other thing.
Yes, your agent is there to guide you, but sadly, sometimes even Agents aren't as knowledgable as they should be.
A perfect example of where not paying attention can cost you is with the counter-offer process.
Here's an example:
Seller Salley is asking $200,000 for her condo. Buyer Bill offers Salley $185,000, and asks for a 120 day Escrow, and wants her patio furniture included. Salley just bought the patio furniture and is insulted Bill would make a low offer, with a long close AND ask for her personal property. Her agent suggests she counter, so she goes back with a price of $192,500, 90 day Escrow and NO furniture. Bill is thrilled with this offer, but he thinks he can get just a little bit more. So he counters Salley's counter at $190,000, conceding the patio furniture and extra 30 days closing. Salley says no and is no longer willing to negotiate with him.
Bill signs the $192,500, 90 day Escrow Counter.
The only problem is, this offer is no longer on the table!*
A counter-offer is a rejection of the offer on the table.
There are no "take-backs".
This goes for both parties.
Once an offer, or a counter-offer is rejected, the offering party has no obligation to honor their now rejected offer.
In the course of reviewing files, I find this most commonly mis-understood during inspection negotiations. The seller offers to fix "x", the buyer wants more, the seller says no and the buyer doesn't understand that because they have rejected the seller's response, it's no longer on the table.
No take-backs...of course the parties can continue to move forward by mutual consent, however there is no contractual obligation.
Always understand the terms of any contract you sign.
The time-frames and consequences of every response. Your real estate broker should always outline your options, the pros and cons of each choice you make. However, it's your John Hancock on the bottom line.
Make sure you're making an educated decision prior to putting pen to paper.
*This post is written from the perspective of using NWMLS forms in WA State. Other states may have different provisions or processes outlined within their proprietary contracts.
Negotiating a real estate contract (emphasis on the word contract), is often misinterpreted not only by the principals to the transaction but many times the Brokers involved.
Photo Credit David Castillo Dominici