There is a lot that goes into writing an offer when purchasing a home. Most people are just focused on the price and getting the best deal possible, however, there are many things to consider. Some of these effect the bottom-line number and others address other terms that are just as important.
What’s Included and What’s Not
The first thing is to make sure you are clear what is and isn’t included with the purchase. Our typical purchase agreement already includes things like surface and mineral rights. The purchase also includes things like built-in appliances (dishwasher, water heater, furnace, etc), shelving, cabinets, lighting fixtures, window treatments, etc. If you are expecting the kitchen appliances to stay, then you must explicitly list those items. Although any attached items should be included, I would list out any attached speakers or home theater equipment is you want it to stay. You may also explicitly EXCLUDE items. This means you do not want it and the seller is responsible for removing it from the premises before the closing. The seller might want to exclude appliances they intend to take with them (like a washer & dryer).
Purchase Price & Financing
I’m including these together because they many sellers may take a lesser offer price if the financing is stronger. In general, a cash offer is the best financing option. Typically this means the buyer doesn’t have to jump through hoops with a lender and an appraisal is not necessary. If the buyer is getting a mortgage, then the more they are putting down, the better their offer.
Earnest Money Deposit (EMD)
This is a deposit on the offer. It will be credited towards the buyer’s purchase. The EMD is usually contingent on the home inspection and financing (specifically the appraisal in most cases). The higher the EMD, the more serious the buyer. That is because once all of the contingencies are removed, the buyer is less likely to abandon the deal knowing they will lose the EMD.
Closing Date
Believe it or not, this could be a bigger deal than people realize. On the seller’s side, they might need time to arrange their move. So a quick closing isn’t necessarily desirable for them. For the buyer, however, that closing date could be based on the end of their current lease, the sale of their own home, the start of a job or the beginning of the school year.
Possession
In some cases, after the closing date is negotiated, the seller might need to remain in the property for a week, a month or even more. Possession is when the seller (previous owner) will hand over the keys to the new owner. If this is not happening at closing, then there is a daily occupancy rate the seller must pay to the new home owner. This amount is typically based on the new home owner’s principal, interest, taxes and insurance payments. However, this is totally negotiable. The new owner might want to collect more than that or maybe will accept less just to make the deal work.
Sewage & Water
You can negotiate who pays the sewer and water bill during any potential possession period.
Home Warranty
The buyer can request the seller to provide a home warranty. Who pays for the home warranty is totally negotiable.
Offer Time Limit
In order to put some pressure on the seller to decide before entertaining other offers, the buyer can put a deadline on their offer. This works well in a buyer’s market where the seller is desperate to get offers. However, in a seller’s market, a seller could ignore any expiration date/time on the offer knowing that you might still be interested whether they respond in time or not. So don’t put too much weight on this unless you know it will have the impact you are expecting.
Inspection Contingency
The buyer can sometimes increase the “attractiveness” of their offer by waiving the home inspection. However, I always recommend getting a home inspection (even if you want to waive the contingency). How much time you have to do your due diligence is another negotiable item. A seller could favor an offer with a 3 day inspection period over one that is 10 days.
City Inspections
Some cities require an inspection or certification. Who pays of it, who pays for any required repairs, etc are all negotiable.
Seller Concessions
For buyers that might need help with closing costs, you can negotiate a credit from the seller towards the buyers’ closing costs. This is typically applied towards closing costs, pre-paid interest, tax pro-rations, etc up to an agreed amount and not as cash back to the buyer at the closing. Use it or lose it.
Final Walk-thru
Typically scheduled within 24 hours of the closing, the final walk-thru is the buyer’s chance to check the property and ensure that everything is as expected. In most cases the buyer last viewed the property at the home inspection. The final walk-thru is to make sure that the property condition has not changed. It is not to see if they change their mind or not. Any repairs or unexpected changes can be dealt with prior to closing.