How An Offer Is Written
The Process
Discuss. Discuss with your agent what the terms of your offer will be.
Name(s). Supply your agent with your full name(s) as they appear on your drivers license(s) for the contract.
Pre-approval Letter or Proof of Funds. Supply your agent with a pre-approval letter, pre-qualification letter, or proof of funds to submit with the offer.
Prepare Agreement. Your real estate agent will prepare a purchase and sale agreement outlining the terms of the purchase along with any other disclosures, amendments, addendums, or other necessary documents.
Signatures. You and your agent will sign the offer.
Delivery. Your agent will deliver the signed offer to the seller or seller’s agent via email and confirm receipt.
Terms of an Offer
Offer Price. Discuss and determine with your agent what a good first offer price will be.
Binder/Escrow Deposit Amount. Determine how much of an earnest money deposit you will put down as a promise to fulfill your part of the contract. A typical binder deposit is 1-3% of the purchase price, but can be any amount. This money is held by a neutral third party until closing.
Contingencies. Determine if you want to include contingencies for the purchase and sale, such as a contingency for the sale of your current home. If financing the purchase with a loan, a contingency for loan approval and a contingency for the purchase price to not exceed the appraisal value are standard.
Closing Costs & Credits. Determine which party you want to pay each fee. Typically, buyers pay a standard set of fees, as do sellers, but you may discuss with your agent what options you have. A credit to the buyer may be included in an offer if you want the seller to cover your closing costs, and reduce the amount you need to bring to closing. Be sure to check with your lender to ensure they will allow any credits you propose in your offer.
Timeline and Dates. Determine the time periods for submitting the binder deposit, the inspection, loan approval, and closing. Standard lengths of time for these periods are 3 business days for binder deposit delivery, 10 days for inspection, 30 days for loan approval, and 30-45 days for closing.
Offer Expiration. Decide how long you want to give the sellers to provide a response before your offer expires. The typical time to allow sellers to respond is 24 hours.
What’s Next?
Counteroffer. A seller may counter your offer with an offer of their own, which you may either accept, decline, or again counter back with another offer.
Declined offer. In this instance, a seller expresses they do not want to negotiate with your starting terms. You may walk away or present an offer more favorable to the seller to encourage them to negotiate.
Accepted offer. Once an offer has been signed by both parties and delivered back to the party who made the offer before the deadline, the contract becomes binding. Contract periods start the next day.
Late Acceptance. If the seller signs and delivers the contract after the offer has expired, you have the right to approve the contract before it is binding. In other words, if the seller signs the offer after the expiration date, it is a counteroffer subject to the buyer's approval.