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Making the Offer




Once you find a home that you want to buy, the next step is the write a offer to purchase the property. This is the first step in the process of negotiating a sales contact with the seller.

It's important to put yourself in the seller's shoes. Imagine how he/she will react to each item you include in the contract. Determining how the seller may respond will help you in negotiating sale terms that are in your favor.
It's very important that you include "contingencies" in your offer that protect you and your investment, such as certain recommended inspections, and repairs or other conditions that you would like the seller to agree to. Besides the sale price, the offer specifies how you're going to pay for the property and the terms of the loan (down-payment, mortgage term and rate, who pays for closing costs and title), timetables, personal property inclusions and/or exclusions, closing date and time of physical possession, and agreed upon ways of settling disputes.

Oral promises are not legally enforceable when it comes to the sale of real estate, so it's imperative that contracts and addendums are available to legally and uniformly address a variety of issues pertaining to the terms and conditions of the sale. These standardized contracts are written by real estate attorneys, updated constantly to reflect changing laws, and endorsed by the California Association of Realtors. In many states, certain disclosure laws must be compiled with by the seller, and these standardized forms meet all legal mandates.

After you have decided on an "offer price", you then determine how large of a deposit you want to make with the offer. This is calleed an "earnest money deposit" , which means exactly that - "how committed are you to buying this property?" The customary deposit for Marin County is usually 3% of the offer price. It can be less, if the seller agrees to it, but sellers do expect reasonable earnest money to accompany the offer as a show of "good faith". If you're competing with several other buyers for the same property, there may be "multiple offers", and a large deposit may impress the seller enough to accept your offer over the others, even if the competitors are offering the same price or slightly higher.

The earnest money will become part of your down-payment. It is held in an escrow account with the Title Company who, once the offer has been accepted, will handle the disbursement of purchase money funds at "close of escrow".

The offer you submit, when accepted, becomes a "binding" contract, subject to the included contingencies. Contingencies protect the buyer if, for some reason beyond their control, he/she cannot perform, or choose not to perform on a promise to buy the property. For example, if the buyer is unable to obtain financing, the buyer will not be bound to the contract, as stated in the loan contingency clause of the purchase contract. However, if the buyer cancels the contract without reason, without having included conditions and sufficient contingencies to protect them, the buyer may have to forfeit the earnest money and may be sued by the seller for damages.

Every time either party makes a change in the terms of the offer, then the other side can accept or reject it, or make their own "counteroffer". For example, a buyer  may accept the counteroffer at a higher price, but may now want to include the patio furniture in the sale price. Once the buyer or seller signs an unconditional acceptance of the other's proposal, this offer becomes a binding contract.

A transaction is considered "closed" and the buyer becomes the new homeowner when the deeds have been recorded, and not beforehand.



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