After we have spent quite a bit of time looking for it, you finally find it — your “dream house!” We can quickly move from the looking process to the buying process, if you have done your part.

Once you decide that you want to buy the house, this is the point where you make an offer. This is done by having our agent write the offer, which we will then review. You then sign and initial it in all of the appropriate places. It must include information about the type of financing you plan to use, which is why having that pre-qualification letter is so important. The offer will then become the contract of sale after the seller accepts it. When both you and the seller sign the offer, you have what is known as a ratified contract, and you agree to all of the contract conditions.

Before you sign the offer, you should read it carefully and make sure you understand every detail. You need to ask questions. This is where it is REALLY important to have an experienced Realtor working for you as your Buyer’s Agent.

Anything that you have agreed to verbally should be written into the contract. If you plan to have a lawyer represent or advise you, retain one as early as possible. Under normal circumstances, it is not necessary for you to include an attorney in the purchase process. It’s good to know, though, that should something arise that I as your Realtor cannot handle, that you can seek the appropriate legal advice. Here are some things to keep in mind:

Offers and Counter Offers

After we complete the offer, our agent will arrange “present” the offer to the home seller and the listing agent. You, as the buyer, will not communicate directly with the seller or with the listing agent. Everything that will happen from this point forward goes through our agent working as your Buyer’s Agent and the listing (or seller’s) agent.

The seller, the listing agent and your Buyer’s Agent will then discuss the offer. The seller has three choices at this point: (1) to accept the offer as written, (2) to make “counter offers” on unacceptable aspects, or (3) reject your offer. If there are multiple offers being presented, the “winning” offer will either be accepted or countered and the other offers will be rejected.

The seller’s agent will then notify us about the status of your offer. If it is accepted, then we will begin the process of finalizing the financing and scheduling the inspections and handling all of the details that will be required to reach settlement. If your offer was countered, you have the option of accepting the changes or making a counter-offer of your own or rejecting the changes.

The offer to buy becomes a ratified contract ONLY when all parties have initialed every counter and signed the offer. When you sign the offer to buy, you also will be required to submit a deposit to show that you are earnest about your desire to buy — appropriately called an “earnest money deposit.” 

Making Sure Your Contract Is Complete

Sales contracts differ, depending on the individual circumstances of each transaction, but there are several provisions you may want to include in a contract for the purchase of real estate.  

  • Deposit — The amount of the “earnest money deposit” should be clearly stated, plus the amount of money you will be paying at settlement and your sources of financing. A common purchase deposit in many areas is 1-2% of the purchase price. This money will be held in a non-interest bearing account with Long & Foster until settlement. 

  • Contingency on Financing — You need to be specific about the total loan amount, the date a second or third mortgage is due, and the exact financing terms. This is why the pre-qualification for a mortgage is so important. Many contracts have an “alternative financing clause” that allows buyers to accept different financing than that which is written in the contract, as long as it doesn’t affect seller’s net proceeds.

  • Contingency on Inspection — You may make the contract contingent on a home inspection. The buyer usually will pay for this inspection, but the peace of mind or detection of a problem that this inspection provides to you is well worth the cost of inspecting. In addition to the home inspection and the termite inspection discussed below, you as the buyer have the option of requesting inspections for lead-based paint (for properties built prior to 1978), radon, mold and other environmental hazards. In some areas, well and septic certificates are also required.

  • Termites — The contract may require the seller or buyer, depending upon the area, to pay for a termite inspection. The results of this inspection may further require payment for removal of the infestation and repair of any damages from the infestation. You should get a written report at settlement indicating that the property is free and clear of any active termite infestation.

  • Personal Property — Light fixtures, drapery rods, chandeliers, washers, dryers, refrigerators, heating oil in the tank, storm windows and doors, firewood, even swimming pool chemicals, and other items that are not physically attached should be specified in writing if they’re to be conveyed to the buyer. Misunderstandings based on verbal agreements can delay settlement — as well as cause unnecessary friction.

  • Repair Work — Standard contracts of sale require sellers to be responsible for plumbing, heating, mechanical, and electrical systems to be in working order at time of settlement. You should conduct a “pre-settlement walk-through inspection” which is usually done not more than three days before or no later than the day of settlement.

  • Title Attorney or Insurance Company — You have the right to select a title attorney or insurance company. They will do the title search, produce a Title Abstract, and advise you about your options for purchasing the title insurance. You should shop and compare prices before deciding what attorney or title company will conduct your settlement. Also, be sure to clear the title company with the lender, whose interests are also involved. we have worked with many title companies and can help you choose one that will work well for your transaction … many of them are listed in our Business Directory.

  • Closing and Occupancy Date — This is also known as the settlement date. If needed, this will include an arrangement with the seller in the event you can’t secure possession on the agreed date, such as a daily rent-back agreement for “post-settlement occupancy”.