When searching for your dream home, you were just that – a dreamer. Now that you’re writing an offer, you need to be a business person. You need to approach this process with a cool head and a realistic perspective of your market. The two basic components of an offer are price and terms.
Price – the offer price should reflect the true market value of the home you want to buy. I will do a market analysis to determine the sale price of similar homes in the area. The results of this market research will help guide your offer price decision.
Terms – the other financial and timing factors that will be included in the offer.
There are eight categories of terms in NC’’s Offer to Purchase and Contract:
- Schedule – a schedule of events that has to happen before closing. In North Carolina, the schedule includes the due diligence period end date, the date for payment of additional earnest money (if applicable), and the anticipated closing date.
- Due Diligence Fee – a fee paid to the seller by the buyer to allow the buyer a period of time to thoroughly inspect the property before committing to the purchase. During the due diligence period, the buyer must obtain any financing needed to purchase the property. The buyer can back out of the contract at any time during the due diligence period with a full refund of the earnest money.
- Earnest Money – money paid into a trust account for the protection of the seller. This money is considered liquidated damages to the seller if the buyer unexpectedly pulls out of the deal after the due diligence period. It also makes a statement about the seriousness of the offer. The due diligence fee and earnest money are deducted from the sales price to determine the amount due from the buyer at closing.
- Home Owners Associations and Special Assessments – dues for Home Owners Associations and/or special assessments can add significant costs to the ownership of a particular property. The North Carolina Offer to Purchase and Contract specifies these costs so that the buyer can make a reasonable assessment of the monthly costs associated with ownership of a particular property.
- Conveyances – the items that stay with the house when the sellers leave.
- Contingencies – the only contingency in North Carolina’s Offer to Purchase and Contract is for the buyer’s sale of his/her current home.
- Home warranty – this covers repairs or replacement of appliances and major systems. You may ask the seller to pay for a home warranty.
- Closing costs – it is standard for buyers to pay their closing costs, but if you want the sellers to pay some or all of the closing costs, we need to write that into the contract.
Once we have completed the Offer to Purchase, you will sign the offer. I will then present the offer to the listing agent who in turn will present it to the seller. The seller can accept the offer as written, reject the offer completely or counter the offer. If the seller counters the offer, the the original offer is not longer valid and you (the buyer) have the same choices of accepting, rejecting or countering. Once the price and terms of the negotiated offer are acceptable to both the seller and you, the buyer, the Offer to Purchase and Contract with the negotiated price and terms will be signed by both parties. At that time, you must pay the due diligence fee to the seller and the earnest money to the trust account in accordance with the contract terms.