How to Submit a Real Estate Offer and What to Expect

A real estate offer is a formal proposal from a potential buyer to purchase a property. It outlines the proposed price, terms, and conditions, initiating the negotiation process to establish a mutually agreeable contract. An offer serves as the blueprint for the transaction, detailing key elements that define the proposed sale.

Gathering Information for Your Offer

Before drafting a real estate offer, thorough preparation involving financial and market considerations is necessary. Securing mortgage pre-approval provides a clear understanding of the maximum amount a lender will finance. This involves a review of income, assets, and credit history. A pre-approval letter signals to sellers that a buyer is financially qualified.

Determining the offer price involves analyzing comparable sales, market conditions, and property condition. A real estate agent provides comparative market analysis (CMA) reports, detailing recent sales of similar homes. The buyer’s budget and seller’s motivation also influence the price. In competitive markets, offers may be at or above asking price; slower markets allow more negotiation.

Contingencies

Contingencies are clauses in the offer that specify conditions for the contract to become legally binding. Common types include inspection, appraisal, and financing.

Inspection Contingency

An inspection contingency allows the buyer to have the property inspected for defects. Buyers can negotiate repairs or withdraw if significant issues are found.

Appraisal Contingency

An appraisal contingency ensures the property’s appraised value meets or exceeds the offer price, protecting the buyer and lender.

Financing Contingency

A financing contingency provides a timeframe for the buyer to secure a mortgage. It allows withdrawal and earnest money retention if financing is not obtained.

Other Contingencies

Other contingencies might include the sale of the buyer’s current home. Buyers decide which contingencies to include based on risk tolerance and market competitiveness, as too many can make an offer less attractive.

An earnest money deposit, or good faith deposit, is submitted with the offer to show serious intent. This deposit is held in an escrow account by a neutral third party until closing. Amounts typically range from 1% to 3% of the sale price, varying by local market. If the deal proceeds, earnest money is usually applied towards the buyer’s down payment or closing costs.

The offer specifies the desired closing date, typically 30 to 60 days after acceptance, allowing time for inspections, appraisals, and loan processing. Other terms include the inclusion or exclusion of items like appliances or window treatments, and any seller concessions, such as contributions to closing costs. A real estate agent advises buyers on these decisions.

Assembling and Submitting Your Offer

Once preparatory information is gathered, the real estate offer is assembled as a purchase agreement. A real estate agent usually drafts this document using standardized forms. The agreement details the property’s address, buyer and seller names, purchase price, and specific terms.

The document incorporates decided contingencies, such as inspection, appraisal, and financing, with their timelines. The earnest money deposit and proposed closing date are stated. Any specific inclusions or exclusions, like appliances, are itemized.

After the initial draft, the buyer reviews the purchase agreement for accuracy and completeness. Once satisfied, the buyer signs the document, either electronically or with a traditional signature. Supporting documents, like the mortgage pre-approval letter and proof of funds for the earnest money, are typically attached.

The complete offer package is delivered to the seller’s agent, often electronically. The buyer’s real estate agent manages this process. Sellers typically respond within 24 to 72 hours, though there is no strict legal deadline.

Navigating the Seller’s Response

After an offer is submitted, the seller can respond in several ways: outright acceptance, a counter-offer, or a rejection.

If the seller accepts the offer, they agree to all terms and conditions. The offer becomes a legally binding purchase agreement. The buyer then deposits earnest money into an escrow account, and the process of opening escrow begins. This leads to fulfilling contract contingencies, such as scheduling the home inspection and appraisal.

A counter-offer indicates the seller is willing to sell but proposes changes to the original terms. This might involve a different price, altered contingencies, a revised closing date, or changes to included items. The buyer can accept, make a new counter-offer, or reject it. Negotiation continues until both parties agree or discussions end.

A seller may reject an offer. Reasons include the offer being too low, containing unfavorable terms, or the seller receiving a more appealing offer. If rejected, the buyer can review feedback and decide whether to submit a revised offer or continue their home search. Adhering to specified timelines in the offer or any counter-offers is important, as deadlines impact proposal validity.