You found a home you love so you want to put an offer on the home. The agent gives you an 8 page document to sign, but what are you actually signing? Here, we'll walk through the important parts of your offer so anyone can understand!
3. Purchase Price:
How much you are offering for the home, what amount loan you are getting.
4. Earnest Money
Earnest money is money you give to an attorney to hold in order to show the seller you are serious about buying. This is usually in the amount of $500 or $1,000 and a certified cashier's check is usually due to your agent within 2 business days if the offer is accepted. This shows the seller "if I (buyer) back out of this contract for no reason, the sellers can have the earnest money". We talk more about this later.
5. Transaction Costs:
Here you determine who is paying and how much for closing costs. "A" says the buyer will cover all of closing cost and "B" says seller will pay $X,xxx in closing and buyer will cover the rest at closing.
This covers that if for some reason you fail to get approved for a loan/secure financing for any reason, you get your earnest money back. You'll get the full amount back. This also is to state what kind of financing you will be using.
An important part of this is that you (the buyer) has 5 business days to apply for financing when the contract is accepted. You must go to your lender and actually 100% apply for the full loan asap.
This covers that the offer is dependent on how much the appraisal is for the house. This says that if the house isn't worth as much as you offered, then you have the right to renegotiate or back out and get your earnest money back. This says you won't pay more for the house than the house is worth.
This says; on closing the name(s) on the deed of the house are __ and ___. This says who owns whatever percentage of the house. This is different than who is on the loan and is different than "deed in trust" which is who gets the house if something happens to the person on the deed.
This also states the date that closing will take place and you get the keys. Here, we also usually ask them to have everything out of the house by the time you move in.
8 and 9. Inspections:
Once the offer is accepted, this part says you are allowed to enter the home and hire inspections of the property. This gives you 10 business days to schedule any inspections you want and ask the seller to fix anything you want. Usually you ask for large things wrong with the house. More on inspections here:
Asking for the seller for any inspections opens the contract back to renegotiations and the seller has the right to back out of the sale or negotiate what they will fix. (By now the seller has taken the property off market so they are more inclined to fix reasonable costs)
11. Condition of Property
This says that the property will remain in the same condition as when you put an offer in. Meaning that the seller can't redo the lawn, or change anything on the property unless you ask them to. You don't have to worry about any shrubs being removed, or copper wiring or anything.
14. Home Warranty
Usually this says we are asking for the seller to provide a home warranty upon closing. In short, almost anything that breaks within a year will be replaced.
15. Property Documentation
The main parts here are to show that you know where the water/sewer comes from and if your new home is in a flood zone or not. This also shows if you are in an HOA neighborhood or not and the HOA payment.
Anything that is fixed to the house stays unless otherwise stated. Anything that can be unplugged/ moved goes with the seller. For example: T.V mounts stay because they are fixed(Screwed/nailed) to the house, but the T.V itself can be moved so it goes with the seller. Curtain Rods stay with the house (Mounted to the wall), but the curtains themselves go with the seller. Fridge, Washer, Dryer, not attached sheds, etc all go with the seller.
18. Other Terms:
Anything not in the contract you can put here. Here you can ask them to leave the washer, dryer, fridge, t.v, etc. You can ask them to keep utilities on until the day after closing or perhaps they repaint the walls.
This concerns closing costs, saying everything necessary(taxes, hoa dues, etc) will be prorated.
If the house burns down/ gets destroyed before closing, you get your earnest money back and are able to back out of the contract penalty free.
In short, if you back out of the contract for any reason not covered, the seller get your earnest money.
25. Expiration of Offer
The offer will be automatically withdrawn at whatever time specified. The seller has until then to say they accept the offer or reject the offer.
31 Megan's Law
We cannot legally tell you of any criminal records around the property. We highly recommend you check the national sex offender registry and criminal registry before moving in your home if you would like.