What should I put into my Offer?

Never Make an Offer without Reading This First

Remember, the real estate agent is not necessarily your best friend though an agent can be very helpful in directing you to good properties. But ultimately real estate agents are commission-driven. They exist to close deals, collect their commissions, and not necessarily to look out for a seller’s or a buyer’s very best interest.

In some states an agent can legally represent both the buyer and the seller. This is called "dual agency." If you involve yourself in this arrangement, be especially careful. In some states it is illegal. Remember, too, that all contracts are not created equal! The boilerplate on the purchase agreement—known casually as "the offer"— you are about to sign varies from county to county and state to state.

In highly regulated counties, like Montgomery County, Maryland, for example, you will find a lot of protections already in place on the standard realtor’s Purchase and Sale Agreement. In other regions, the standard agreement is strictly caveat emptor, which means buyer beware. Third, be aware that a "Purchase and Sale Agreement" is legally binding on you, your children and heirs. It is a very, very good idea to have a real estate attorney review the document and offer recommendations before you sign it. Whether it’s a seller’s or buyer’s market, you will want to insert the following contingencies into your offer.

1. SHORT DEADLINE - Your offer should be valid for a short period of time, say 24 to 48 hours, expiring on a specific month, day, year and hour, including am or pm. It must be specified in writing on the contract.
   Why: A short deadline demonstrates that you are a buyer who won’t wait, a buyer who means business, and someone who won’t be stalled. This especially will prevent the seller from "shopping" your offer around, using you as bait just to attract a better offer from someone else. A short deadline also prevents a confused or conflicted seller from taking an unreasonable period of time to decide if they really want to sell, or not, and at what price.
2. LOAN TERMS - Specify that the terms of the loan must be acceptable to the buyer through closing.
   Why: It is possible to obtain loan approval that later goes south, for one reason or another, before you’ve actually bought the house. You want to be protected through closing day.
3. INSPECTION TIME - Take the time you’ll need for full, complete, impartial inspections of the house you’re planning to buy: 30 to 45 days is reasonable.
   Why: You will also need to allow time to gather estimates for repairs, as described below.
4. REPAIRS versus PRICE REDUCTION - If the inspection uncovers any major repairs to be made to the house, it is usually far the wiser course to obtain an estimate for the cost of the repairs and ask for a commensurate reduction in the price of the house. This point needs to be spelled out in the initial offer you make on the house.
   Why: You don’t want the owner to make cheap or faulty repairs just to close the sale. If disagreement arises over repairs, you want to be able to get out of the contract.
5. COST OF REPAIRS - You want any single, necessary repair over a certain dollar amount that you specify to either let you out of the contract or to be a point of negotiation in determining the final sale price of the house, as specified above.
   Why: If you specify a dollar amount for any single repair much under $500, the seller is likely to hate you and look for another buyer. If you specify that only any single repair over $1,000 will let you out of the contract or will be the basis for a credit against the final selling price of the house, you the buyer could end up paying for a new dishwasher, porch floor, hot water heater, toilet fixtures, rainspouting, and so on and on.

Make your list and, as the song says, check it twice. Check that what you are asking for in the Agreement to Purchase actually gets written into the contract by whoever is drawing it up for you. Chances are that your real estate agent or lawyer will take care of this. But if anyone has left anything out that is important to you, such as the contingencies discussed above, it’s up to you to catch it. Even though it takes time, know exactly what you are signing!