“How do I write an offer?”

This is the question I was asked by a buyer this week after finding the right house. Because they aren’t first time buyers, I was caught off guard because I assumed they had been through the process before and already knew what to do. This got me thinking… just because someone already owns a house, it doesn’t mean they understand the process. Things have changed so much over the years with real estate that a crash course is necessary. So let’s explore how to write an offer and what that entails.

If you are contemplating an offer, you are probably thinking not just about what price you are willing to pay, but you’ve started thinking about all the other stuff involving the house as well. You’ve moved past the fun stage of daydreaming about furniture placement and paint colors, and now you are in the nitty gritty of the actual structure.  You might be asking yourself “How’s the roof? What about termites? Radon? How do I know the water is safe to drink? Does the foundation look good?  What if something bad shows up in the inspection, am I stuck with the house? What do I do once my offer gets accepted? Who writes the offer? Can we negotiate? How does that work?”

All these questions- and more- are covered in the purchase agreement provided by your Realtor®. There is a section about how many days from acceptance of the offer that you have to perform a home inspection, and what the home inspection includes. There is another section about doing a pest inspection. Another section talks about a well, water and septic inspection, and possibly a radon inspection.

The offer will also ask for a breakdown of your financing- what type of loan you are getting, and possibly ask for your maximum quoted interest rate, length of time your loan is for, etc. You can also ask for closing cost help from the seller (seller concessions).

Other things your offer will include is when you can get possession of the house- immediately at close, a few days after close, 30 days after close, etc. and all the details of that- charging rent to the seller, condition of house when vacated, etc. Also mentioned in the offer is a proposed closing date, doing a final walk-through and if you want a home warranty. If something isn’t accounted for that you are concerned about, your agent can write it in.

Your offer will be contingent upon all this- the inspections, financing, and whatever else was written in. This means if something goes wrong with one of the inspections, or the interest rates suddenly spike before you lock in your rate, you can get out with your earnest money intact.

This brings us to the earnest money (or good faith) deposit. “EMD” is money you pledge to show the seller you are serious about purchasing the house. In some areas, the money is as low as $100, in others it is a percentage of the purchase price. The check is generally turned in to your agent upon acceptance of the offer. Your agent will then deposit it in a trust account. This money will go towards your costs at closing. But if one of your contingencies isn’t met- such as a satisfactory inspection or financing falls through, you will get the money returned to you. Usually the only time you don’t get your EMD back is when you simply change your mind about buying the house. Unfortunately, that isn’t a contingency, and therefore you aren’t protected.

After you sign your offer, your agent submits it to the listing agent. If the seller decides to counter your offer, they will write an addendum to your offer. This addendum will need to be signed by you, and either you accept their counter, or you counter again on another addendum. The addendum only changes the part of the purchase agreement it is contesting. This means that if the seller only countered the purchase price and possession date, then everything else you wrote was accepted.

Once accepted, you turn in your EMD, schedule inspections, and go see your lender about starting the loan process. And you now know that all those questions and concerns that have been pestering you are covered in the purchase agreement. If something goes wrong, it’s been accounted for. You’ve “got this.”  So feel free to let the nagging questions go, and get back to the enjoyable part of buying a new house- decorating and daydreaming.