You finally did it, you found the home of your dreams. Since you've already shopped around and pre-qualified, you know that you can afford it and approximately what the payments will be and how much money you'll need to bring to closing. Now you're ready to make an offer. Many first time homebuyers have no idea how this is actually done. Often, buyers call in on a property and ask the agent to make a verbal offer to the seller. Usually this is an extremely low, often ridiculous offer, referred to as a "lowball" offer. More on lowball offers later, let's look at why verbal offers are shunned by agents and sellers. In Texas, offers are formally made by filling out a contract, specifically a One to Four Family Residential Contract (Resale). This contract is a legally binding document (when signed by all parties) and specifies the details of the offer. These forms once were about a page in length but have grown into an 8 page tree killer. Most of the contract is standard legalese and is about as interesting reading as the table of contents of a calculus textbook, in Chinese. Your agent can explain what this lawyer secret code means in general terms but you should ask an attorney for a more detailed explanation.
There are several places in the contract that are what are referred to as negotiable items. These spots on the contract are easy to find because there are either fill-in-the-blank spots or checkboxes or a combination of the two. Some of the blanks are for things like the seller and buyer names, and the address and such but the negotiable ones are the things that the entire deal hinges upon. In a particular real estate market some of these negotiable items are customarily paid for by the buyer and others by the seller but they are still negotiable. These can vary greatly from region to region. For example, in Waco, buyers customarily pay for a survey if their lender requires one (they usually do). Sellers customarily pay for title insurance since they are guaranteeing that they have the right to sell the property (title insurance protects the buyer against ownership claims from third parties). It is important to know the customs of your local market since an offer that is presented asking the seller to pay for something he wasn't expecting to, may be met with a great deal of resistance. However, other terms of the offer may make the seller more amenable.
Here is a list of the most important negotiable items found in a standard offer:
Bill Patterson
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