Making an Offer
The prevailing procedure for purchasing real estate in our Massachusetts market is a two-step process. Generally, the first step (offer) is prepared by the buyer with the buyer’s real estate agent. The second step (approximately two weeks hence with a mortgage or one week hence with a cash sale), is the Purchase and Sales Agreement (known as the P&S) prepared by the buyer with the buyer’s attorney. The offer may contain various contingencies such as financing and inspection(s) of the premises.
An offer to purchase is prepared that includes but is not limited to: * Price offered * Date of expiration of offer (generally 24 hours or less) * Date of P&S (generally 1 to 2 weeks after offer) and date of closing (the actual purchase day) * Deposit amount and who will hold it in escrow (generally $1000 with offer (called a binder) and 5% of purchase price at time of the P&S) It is held by the seller’s attorney or listing agency, occasionally buyer agency. * Contingencies (not necessarily limited to those below) *Financing (date for commitment letter determined after discussing with lender) * Inspection (7 days or less to perform plus 1 additional day to back out, if necessary) * for condominiums – review of documents and budget by attorney * for multi-family homes – review of existing leases by attorney Once an offer is accepted, buyer will make a deposit of $1000 (binder) to the listing agency If the buyer chooses to terminate the offer after the inspection, the $1000 binder is refunded. If financing is not obtained on the date set forth and the buyer has made a diligent effort to do so, the buyer may choose to terminate the P&S in writing, in which case all deposits are refunded.
These are the forms you will be required to sign when making an offer. *Offer Form (Contract to Purchase Real Estate) explained above * Agency Disclosure (Massachusetts Mandatory Licensee-Consumer Relationship Disclosure) which defines whether the agent is working as a buyer’s agent, a seller’s agent, or a facilitator. I only represent buyers as a buyer’s agent, insuring I am working in their best interest. This form is signed at the first client/agent meeting. * Lead Paint (Property Transfer Notification Certification for properties built before 1978) describes what knowledge and forms (if any) that the seller is providing and documents that the buyer agent has provided the necessary information to the buyer. * Consent to Designated Agency which sets forth that a specific agent (Deb Stein) and not the other agents at my agency will be representing you. * Home inspector disclosing informing you that you have the right to do a home inspection A preapproval letter from your lender will be included with the completed forms.Although an offer can be prepared in a hard copy, this is unusual. Electronic signatures are acceptable and easy to do. I prepare the paperwork and email it to you to e-sign on a computer, phone or tablet. We go over the offer on the phone before you sign to insure it is exactly as you want it.
Here are the questions to think about in order to fill out the offer (technically called Contract to Purchase): * How much are you offering? * Closing date? Generally about 8 weeks from offer with a mortgage contingency but can be sooner or later than that. For cash sales, it can be as soon as the title work can be done by your attorney. *How much of the purchase price are you financing? * Will deposit funds be available by the P&S date? Generally 5% of the purchase price will be held in escrow. Your remaining down payment will be required on the closing date. * Any inclusions or exclusions other than those listed on MLS? (You can ask for items that aren't listed – I once got a canoe and 2 kayaks included for my buyer.) * Are you going to do inspections? (This is at buyers’ expense.) * Are you going for a non-traditional mortgage like FHA or VA? (I need to include that specific information in the offer.) If your offer is accepted you will need: * an inspector (right away if you are doing an inspection) * a real estate attorney to work on the Purchase and Sales Agreement. I can recommend one that will not charge to negotiate your P&S or review condo documents if he/she will also be your bank attorney. * a lender (right away to get application process going if not already done) * a glass of fine wineIf you do not have the above, I can supply excellent recommendations except for the wine. Maybe I should take a wine class so I can recommend that too.
Please let me know if you would like me to send you a blank offer form so that you can familiarize yourself with it.