"I'll Take It!" Submitting the Offer for your New Home

Now that you've done your homework, pre-approved your mortgage, and zeroed in on the home you'd like to buy, it is time to make an offer.

The Realtor's Role

If you're using the professional services of a real estate agent, it's a good idea to explain to them how you arrived at the dollar amount in your offer. For example, if there are certain flaws in the house that you feel should reduce the purchase price. The real estate agent may also advise you on how much you should offer. A good realtor should let you know if your first offer is too low, or too high. While the realtor is an expert, never forget that the ultimate decision is always yours.

Contents of the Offer

Your offer is submitted to the present owners usually through the real estate professional. This document is called a "purchase and sale agreement". The agent is required by law to deliver your offer to the sellers. Your offer should include:

• A legal description of the property
• The price you are offering
• The earnest money amount (see below)
• The size of your down payment and how the remainder of the amount will be financed
• Items of personal property that the seller says will stay with the house or that you wish to be included in the sale
• A closing occupancy date
• Length of time that the offer is valid (usually 3 to 5 days)
• The stipulation that your obligation to buy depends on the negotiation of a satisfactory contract

What is earnest money?

This is a "good faith" payment held by the brokerage firm of the real estate agent. This money shows the seller that you are a serious buyer. It should be held in escrow and returned to you if the seller does not accept your offer within a specified time frame. You forfeit the money if the seller accepts your offer and then you back out of the purchase. There is no set amount and what is customary usually depends on where you live in the United States. A real estate agent should be able to help you determine what is fair.

Negotiating the final price

The real estate agent will usually present your offer to the seller and relay the seller's response back to you. The response can be acceptance, rejection, or a counteroffer. A counteroffer usually indicates that you are close to an agreement. The seller may have a few suggestions or alterations to make it work. A rejection isn't necessarily the end. If you get this response, and you have room to negotiate, you may want to draw up another offer.

Once the seller has signed the dotted line, detailed negotiations to write up a formal sales contract begin. Remember that your offer to buy is reliant upon the negotiation of a satisfactory contract. Along with the basic terms of the sale, there may be contingencies that must be met in order for the contract to take effect.