Making an Offer
It’s important to do a preliminary inspection of the home before you make an offer. Once you have a contract, you can hire a professional inspection, but the preliminary inspection you complete will alert you to problems before you make an offer.
What is an offer?
An offer is a written bid for the property. It’s important that the offer is written because oral agreements are not legally binding.
How do I make an offer?
When you have found a home that you’d like to purchase, you must make an offer to the seller. The seller will decide whether to accept, reject or make a counteroffer. So, how do you make an offer? This is a time when having a REALTOR®'s assistance will be very helpful. Ask your REALTOR® to prepare a Comparative Market Analysis (CMA), which will give you information about comparative homes selling in the same neighborhood. Once you find a home, your REALTOR® will help you write the offer. REALTORS® use standard forms, which will walk you through the process and make sure you provide the necessary information.
What should be included in the offer?
Most REALTORS® use a standard Purchase and Sale Agreement form from the Tennessee Association of REALTORS® (TAR). The seller must complete some of the information on the form. Your REALTOR® will present the offer, and the seller must review and make a decision about the offer.
The TAR Purchase and Sale Agreement form includes the following information:
Purchase & Sale: Parties to the agreement, property address and description of items included/excluded from the sale (i.e., washer/dryer, refrigerator, satellite dish).
Purchase Price & Method of Payment: Price and terms of payment. A buyer will pay all cash, assume an existing loan, or obtain a new loan to purchase the home. An offer may be contingent upon the buyer’s ability to obtain a specific type of loan or loan amount.
Earnest money: Deposit amount and terms of disbursement upon closing and/or default by either party.
Closing & Possession: Date the transaction will be completed and date the buyer will obtain possession of the property.
Property Disclosures: Seller’s notification to the buyer regarding property features (i.e., smoke detector, burglar alarm, irrigation system), defects, zoning violations, environmental hazards, etc.
Inspection: Date by which an inspection should be made; plan for making potential repairs; who is responsible for the costs associated with such repairs.
Time Limit of Offer: How long the seller has to respond to the offer.
Warranties: A list and description of any warranties on the property or equipment contained therein.
Other Provisions: How amendments will be made to the agreement; whose insurance covers the property until the closing date; how the parties will settle disputes related to the transaction, etc.
Method of Execution: Acceptable methods by which the parties agree to the contract terms. TAR’s form provides, “The parties agree that signatures and initials transmitted by facsimile, other photocopy transmittal, or by transmittal of digital signature as defined by the applicable State or Federal Law will be acceptable and may be treated as originals and that the final Purchase And Sales Agreement containing all signatures and initials may be executed partially by original signature and partially by facsimile, other photocopy documents, or by digital signature as defined by the applicable State or Federal Law.”
What is earnest money?
Earnest money is a deposit that shows “good faith” when making an offer on a home. A REALTOR® or an attorney usually holds the deposit. The money becomes part of your down payment. Ask your REALTOR® what is an appropriate amount for earnest money on your particular home.
What happens after I make an offer?
Once you have given the seller the offer in writing, the seller can accept, reject or make a counter offer. The seller can accept the offer just as it stands. The offer becomes a firm contract as soon as you are notified of acceptance in writing. If your offer is rejected, the process is over. The seller cannot change his mind later. A seller can make a counteroffer to change certain conditions of the offer – like the sales price, closing date or conveyances, etc. If you receive a counter offer, you can accept, reject or provide another counteroffer. This process can continue until both sides reach an agreement. The offer is binding when both the seller and the buyer have agreed to all of the terms of the other party’s offer in writing.
Can I withdraw my offer?
Your offer is legally binding after it has been accepted, but you may withdraw your offer before you have been notified of the seller’s acceptance. This can be a tricky area. This is an area where legal counsel should be sought.
What happens next?
Once your offer has been accepted, you’ll begin the closing process.