I found a home, and my agent is preparing an offer. What should I be looking for before signing?
The offer to purchase is the first step in negotiating the terms under which you will be buying your new home. Once the Seller accepts your offer, a binding contract is formed that may be modified only under certain conditions. As with any legal document, you should read the offer carefully. Make sure there is an attorney review contingency, which allows you to review the contract with your real estate lawyer who may change certain terms if necessary. This review period should be for no less than five business days. Under a typical offer to purchase, the attorney can request modifications to any term of the contract except: a) the purchase price, and b) the closing date. It is important, therefore, that these terms are acceptable to you before signing.
What can I expect to find in an offer to purchase?
Besides the offering price and closing date, an offer to purchase should cover both the basic terms of the sale as well as conditions that may be applicable to your specific needs. Besides the purchase price, closing date and attorney review contingency, the following are examples of basic terms that every contract should contain:
- An accurate description of the land, buildings and furnishings that are included in your offer. For instance, are items such as the microwave, the outdoor swing set, the living room drapes, the storage shed in the garage, and the like included?
- The date that you can take possession (which may or may not be the closing date).
- The Seller’s obligation to provide good, marketable title, backed by a title insurance policy.
- The need to provide a recent survey of the property and at whose expense.
- How the property taxes will be allocated between the parties.
- A reasonable period of time to have the property professionally inspected.
- The consequences and recourse if the buyer or seller defaults.
The contract should also provide for conditions that address your particular concerns. These may include the following:
- Assurances that there are no restrictions on how you intend to use property.
- Contingencies on matters such as the availability of financing on acceptable terms or the sale of the house that you presently own.
- Whether special financing sources such as VA or FHA will be used.
- Whether the seller will be obligated to contribute to your closing costs.
The above are only examples of the many issues that can arise in the negotiation of the purchase of your new home. Make sure your attorney reviews them with you until you have a good understand of the contract.
