I once followed a buyer to a Dunkin Donuts as he had decided to make an offer on some land we had just visited. Of course the ever-prepared realtor has a pile of offer packets in their trunk, which I did, but they were in my other car. So I just smiled and took out my pen and wrote the offer on a Dunkin’s napkin. The listing agent was horrified when I presented the offer and said she wouldn’t bring it to her seller. I immediately got her broker on the phone and guess what? She was instructed to present the offer to the seller and the seller accepted, he signed the napkin. I still have that napkin somewhere.
The moral of the story is … In real estate if it’s in writing and contains at least the following five things it’s real.
Offers can be on pre-printed forms or on a napkin or the back of an envelope … the medium really doesn’t matter. What does matter is that they include at least the following content and that they are presented to you in writing.
- Date: the offer is written and time frame within which it is valid
- Property description
- Identification of the Buyer
- Identification of the Seller
- Price & Terms of paying the price – deposits, consideration, mortgage contingency etc.
The offer must also be accompanied by “consideration”.
This is also called Earnest Money Deposit. This is typically a check for $1000 but can be as little as a dollar if both parties agree. Who holds the deposit, where is it held, for how long, and its disposition at closing should be specified in the offer.
What important dates should be specified?
There are three key dates that should be included in the offer. The first is the date of execution of final purchase and sale contract (also called the P&S). The second is the closing date on which the buyer will take possession of the property. The third is the date on which the buyer will get their mortgage commitment from the bank.
What is a mortgage contingency clause?
The contract is conditional while the buyer uses good faith efforts to secure financing. The buyer is released from this agreement if turned down by lenders but they must notify you in writing prior to the expiration of their commitment period. There are specific dates for application and commitments that should be included in the offer.
What is a property inspection clause?
The contract is conditional while the buyer engages experts to assess the condition of the property, inspect for pests & insects, test for radon & mold and/or test for lead paint. They buyer is released from this agreement if any inspection turns up conditions they deem unsatisfactory. The buyer can also renegotiate the terms of the contract based on the findings if they still want the house. There are specific dates setting the time frame within which the inspections and release/renegotiation must occur.
Is a verbal acceptance by the sellers valid?
No. The contract is not valid without signatures of both the buyers and the sellers and the conveyance of the consideration to the sellers (a copy of a check is not conveyance).