Offer 101

You’ve been house hunting for a few months and finally found a place worth putting an offer on.

You’re excited, your agent is excited, it’s time for paperwork. If you’re into the details of contracts (I sure am) send me an email and I’ll give you a blank contract to read. Otherwise, here’s a helpful summary of the terms that secure your home!

Important Lingo to Know

  • “Mutual Acceptance” “Going Mutual” – These synonymous terms refer to when a seller has accepted your offer and all the paperwork is signed & dated appropriately.

  • Contingencies – At their core these mean, “Something must happen for me to purchase this home.”  

  • Default – To default on a contract means to fail to meet the obligations or terms determined in a contract. Also can be called “a breach of contract.” Essentially, if you don’t do something you agreed to do, within the timeline you agreed to do it, you have defaulted. Usual consequences of defaulting are losing your earnest money.

THE OFFER LINGO

  • Purchase Price: The amount of money you are offering on a home.

  • Timelines: All timelines begin the day AFTER you contract is signed.

    • Example: If your Inspection contingency is 5 days and is signed on 12/3/17, day 1 is on 12/4/17

    • Weekends are not counted in timelines if the timeline is 5 days or less.

    • Example: If your Inspection contingency is 4 days, and the first day is a Friday, the second day will be Monday (or the next business day).

  • Earnest Money: This is money given to the seller as a promise to fulfill your part of the contract. Usually, the Escrow company holds it and it can be returned to you (the buyer) if you rescind on the contract within your contingency periods (aka if you don’t default).Generally we recommend no less than 1% of the purchase price.

  • Escrow: These are the middleman that coordinate the transaction between the seller and buyer. The Escrow company gathers all needed legal documents from each side and finalizes the transaction by distributing funds and making sure the transaction is recorded at the courthouse.

  • Inspection: The inspector investigates and delivers a full report on the home. It is generally 36-40 pages.

    • The standard time for an inspection is 10 days. However, 5 is very common in this market.

    • During this time, before 9pm on the final day, you may rescind on the transaction and receive your earnest money back.

  • Financing: This part of the contract is where we indicate the type of financing you are utilizing (FHA, VA, Conventional & so on). It’s also where we disclose how much money you are putting down and if you are asking the seller to cover any of your closing costs.

    • Closing costs are the cost of the transaction. This is where the lender, title, & escrow get paid. As well as transfer taxes etc.

  • Title: Generally, the title & escrow company are the same, but they don’t have to be. Title takes care of transferring deeds, ensuring the seller’s have the right to sell the property, and that the land indicated in the sale is the actual land allowed to be sold.  

    • There is also a Title Review Contingency you have 5 days (unless otherwise indicated), by 9pm on the 5th day, after you receive the Preliminary Title Report to rescind on the transaction and receive your earnest money back.

  • Utilities: Type of utilities are indicated as are there providers. It is also standard practice to request the seller pay off remaining utilities of their ownership as so you do not have to assume them.

  • Appraisal: The lender sends out an Appraiser to determine if the property is worth the purchase price you are offering and thus, worth the loan they are providing. This occurs after inspection, and can take anywhere from 2-9 week. It’s just a bunch of waiting around.

  • Other Addenda: This section allows you to require the seller to fulfill certain responsibilities like cleaning the home before close, title insurance, indicates anything left by the seller after closing now belongs to you.

  • Closing & Possession Date: They are generally the same. The standard is a 30-45 day closing from mutual acceptance, however it may be adjusted based on how long the appraiser takes and the amount of time it takes to resolve any conflicts that arise.

Can you believe after all of that there are still more details and nuances involved in contracts? (Well, I’m sure you can) Of course that’s what your agent is for, they’ll help you understand how it all works and navigate you through the process. For now, read this summary as many times as you need so you’re familiar from the start.

Thanks for reading and happy home hunting!

Hannah-Clarke

By | 2018-05-04T22:14:36+00:00 May 4th, 2018|Real Estate|0 Comments

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