ultimate first-time homebuyers guide
Part 4: Writing an Offer
You’ve found a house you can see yourself living in, and want to make an offer. An offer is more than just the price you’re willing to pay, though. The contract that Oregon Realtors use to write offers is eleven pages long, and those eleven pages will include most details of your offer. Here are the big ones:
Price: By now, you and your Realtor have looked at data, examined the market, and arrived at what you believe to be a good purchase price. You will include that number in your offer (of course), along with how much of a down payment you’re making and how much earnest money you’re including.
Earnest money is a good faith deposit. Usually it’ll be 2%-3% of the offer price, and this money will be due within three days of the seller accepting your offer. It will be held in escrow until closing, at which time the money will be applied toward your down payment. If, however, you terminate the transaction using one of your allowed contingencies, you will get your earnest money back. If you terminate the transaction without using a contingency, the seller will likely be entitled to keep this deposit.
Tip: Don’t just throw a dart when deciding what price to offer. Your Realtor will help you analyze comps (short for “comparables,” or recent sales of similar homes), days on market, seller wants and needs, macro and micro market conditions, and the condition of the property to come up with the right offer price.
Wait, what are contingencies?
Contingencies: The standard contract includes several contingencies— conditions that must be met for you to be satisfied— available to you that will allow you to exit the transaction and get your earnest money back if those conditions aren’t met. Among them:
- Inspection: When writing the offer, you will decide what sort of inspection clause to include. Assuming you elect to do third-party inspections— and the seller agrees— you will have a period of time to have those inspections conducted (at your cost), get quotes from contractors, and negotiate any repairs or credits with the seller. If you can’t come to an agreement with the seller— or there are simply more issues than you want to deal with— you can terminate the transaction using this contingency.
- Seller Property Disclosures: The seller is required by law to fill out a disclosure document, which will outline any known material defects with the house. You will have the ability to review these findings and either approve or disapprove.
- Financing: So what happens if you’re making your way toward closing and your loan falls through? Your earnest money is protected by a financing contingency. This contingency also protects you if the lender’s appraisal (more on that in Part 5) comes in short of the purchase price.
There are a couple of other standard contingencies (such as one to review any HOA documents, if the house you’re purchasing falls in one), and more can be written into the contract. The ones above are the big ones, though, and most transactions that fail will do so over one of those issues.
Personal Property: If you want the seller’s washer and dryer or refrigerator or any other personal property, you’ll need to cite them in the contract. Personal property includes basically anything that is not attached by more than a plug. The general rule is that if it’s built in or requires a screwdriver or shovel to remove (e.g., ovens, light bulbs, curtain rods, fruit trees), it’s a fixture that will stay with the home. Another informal and inexact way of determining fixtures versus personal property is a bit more fun: if you turn the house upside-down and shake it, anything that falls to the ground is personal property.
Tip: To avoid confusion about what is and isn’t personal property, call out any items you want specifically. Also, it’s wise to take pictures of any large appliances when visiting the home so the seller doesn’t switch them out for cheaper models before closing. That would be a contract violation anyway, but evidence is always nice to have.
Closing Date: You will state in the contract when closing will occur. In most cases, this will be around 30 days from offer acceptance, but it can vary. You and your Realtor will determine this date based on how much time the lender needs to process the transaction, along with the needs and/or wants of the seller.
Offer Deadline: Offers in Oregon typically have deadlines on them, which in most cases are 24 to 72 hours from the time the offer is submitted. This will keep you from pulling your hair out waiting for a response (at least for no longer than 24 to 72 hours).
Other Details: The sky is the limit here. Your offer might include seller concessions (i.e., asking the seller to pay for some of your closing costs), post-closing occupancy for the seller, or any number of other conditions. All of those will go into the contract or an addendum that goes with it.
Your offer will be the combination of price and terms that work best for you and will be attractive enough to the seller to choose your offer. There will be negotiating— it’s always wise to expect a counteroffer. Your Realtor will advise you at every step of the process, but ultimately every decision is yours to make.
The writing and waiting are stressful, there’s no doubt about that. You also need to prepare yourself emotionally for what happens if your offer is not accepted. I have no great advice here— everyone reacts to disappointment differently. Just remember that you don’t own the house until you own the house, so do your best to not get too emotionally attached. However, take whatever time you need to process and regroup before plunging back in; it will make you a more seasoned shopper.