Are you ready to start writing offers? Well this is getting exciting. When you start writing offers it is a very exciting and stressful time when you are buying a home – especially if it’s not something you’ve done before. An offer is always in writing; you can’t purchase real estate with any kind of verbal agreement.
What Is An Offer?
An offer is essentially an entire contract filled out by the buyer with the price and the terms that are agreeable to what the buyer is after – what the buyer is willing to propose. But it is essentially an entire contract that, should the seller sign, would become the contract for the purchase of that home. So you’re going to fill out, in California – it’s about 10 pages, worth of paperwork that identifies and breaks down all the important details of the home purchase. This includes what the price is, what the down payment is, what the deposit might be, what kind of financing and who ends up paying what. In a separate module, we are going to cover the purchase contract and the breakdown of it.
What To Expect
The first time you write an offer can be a little bit stressful. In fact, in any new home search, even if you’ve been through a purchase before, you’re going through paperwork and it’s constantly being rewritten and evolved. You can pick up forms to write offers at office supply places. Contracts come in different shapes and size. But the contract most used in California has been written by the California Association of Realtors and it comes up in the vast majority of transactions. If you’re working with a realtor, this will be the document that you’ll most likely use for the purchase of the home. It’s called a Residential Purchase Agreement.
The first time you run through it, you’re going to want to take the time to read the relevant portions of it. But most important – that we’ll cover here – are going to be
~Identifying the property
~What the price is that you’re willing to pay
~How much is your deposit (meaning the amount you’re going to put into escrow) that should you breach the contract could become non-refundable
~How much is your down payment
~What kind of financing
~And -perhaps most important after that – would be the split of fees and costs.
For example, who’s going to pay for the title insurance, who’s going to pay for the escrow, and all of those specific details get itemized and defined so there’s no guesswork. It’s a very well used document, it’s very thorough and complete. The first time through it – you really want to read it.
What Happens Next
In many markets in California, you might find that you’ll write several offers. Subsequent offers are actually really easy. Once you’ve taken the time to familiarize yourself with the document – to write a second offer is a breeze. It’s that first offer, where you do want to take the time to get up to speed on what’s in there. But the most important components you will probably determine include how you want to approach a negotiation, how much money you want to offer relative to an asking price, and how you want fees/costs split. Once you have decided, once you have those patterns in place, when you write offers – you’ll likely just continue on that path.
Unless you’re not having any success – then you might want to reassess perhaps how costs get split. If there’s something about your approach that is not getting you a property – you can reassess. But when you’re writing an offer you’re going to identify in detail through the contract everything – so that all a seller would need to do is sign and you are in contract on the purchase of that home. So familiarizing yourself with how the contract reads and the questions that are going to be asked is a good idea.