So you’ve found the home you want to buy. Now what? You need to make an offer to buy the seller’s house. Your real estate agent will have the forms you need, and he or she will talk with you to decide what terms you want. Your agent will then write the offer for you.
There is more to an offer than simply stating a price you are willing to pay. You will also tell how much money you are going to put down for the earnest money deposit. This deposit is usually about one percent of the purchase price of the home. The earnest money goes into an interest bearing account until your closing for safe keeping. The company typically gives the interest earned to various charities. An earnest money deposit shows that you are a serious buyer, and the money you put down is refunded back to you at closing (usually in the form of a credit toward your closing costs). But, if you decide to not buy the house, you can lose your deposit. In this case, the sellers would keep the earnest money.
In the offer you will also need to tell the buyer how you are financing the home. Many sellers require that you send a letter showing that you have been pre-qualified by a mortgage company. Sellers want this confirmation because they do not want to risk taking their home off the market for a potential buyer who cannot afford the home or who is not serious. This letter will also tell the seller what mortgage company you will use, what type of mortgage you have been approved for, and how much you will put in your down payment.
The offer also states which closing costs the seller will pay and which closing costs you will pay. Although there are typical seller costs and buyer costs, you do not want to make any assumptions. Because offers have to be in writing to be valid, this is your opportunity to set down fair rules about who is going to do (and pay for) what.
Your offer will also state what inspections will be performed and what repairs will be made before the closing. You can also suggest a date for the closing, but many people’s schedules will have to be considered when choosing a date and time (because there are a lot of people involved in a closing!).
Last but not least, you will state the terms of cancellation in your offer. If one party does not do what it was supposed to do, the offer can be cancelled. You will also state how long the seller has to make a decision about your offer – usually buyers give 24 to 48 hours.
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