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A Real Estate Offer is a first offer to buy a plot of real property and serves as a starting point for future negotiations. Important issues to consider when making an offer, in addition to price, include any contingencies, financing options, down payment, and others. This document in its draft form contains numerous of the standard clauses commonly used in these types of agreements; however, additional language may be added to allow for customization to ensure the specific terms of the parties agreement are addressed. This document should be used by individuals that want to make an official offer to purchase real estate.
A Real Estate Offer is a first offer to buy a plot of real property and serves as a starting point for future negotiations. Important issues to consider when making an offer, in addition to price, include any contingencies, financing options, down payment, and others. This document in its draft form contains numerous of the standard clauses commonly used in these types of agreements; however, additional language may be added to allow for customization to ensure the specific terms of the parties agreement are addressed. This document should be used by individuals that want to make an official offer to purchase real estate. OFFER TO PURCHASE REAL PROPERTY [FORM] The property referred to herein shall be identified as follows: the land and buildings situated on and together with a lot of land containing _______________ ( ) Square Feet, more or less, located at _____________________________________________ and further described in the __________________________County Registry of Deeds Book ________ Page ________ (the “Property”). I hereby offer to buy said Property for a total purchase price of [PURCHASE PRICE] on the following terms and conditions: Terms SECTION 1. FINANCING TERMS. A. Obtaining the loan(s) referenced in Paragraph C and Paragraph D of this Section 1 is a contingency of this Agreement. B. Initial Deposit: _____________________ C. First Loan in the Amount of: ______________________ D. Additional Financing Terms: ______________________ E. Balance of Purchase Price: ______________________ SECTION 2. EXPIRATION OF OFFER. This offer shall be deemed revoked and the Initial Deposit shall be returned unless the offer is signed by Seller and a Copy of the signed offer is personally received by Buyer on or before [TIME] on [DATE]. SECTION 3. FURTHER ASSURANCES. The parties hereto shall, on or before _____________________ AM/PM on ______________, _____ execute a [APPLICABLE STANDARD FORM] or any form substantially similar thereto, which, when executed, shall more fully memorialize the terms and conditions between the parties. SECTION 4. MARKETABLE TITLE. A good and sufficient Deed, conveying a good and clear record and marketable title shall be delivered by 12:00 Noon on __________________, ________, at the appropriate Registry of Deeds, unless some other time and place are mutually agreed upon in writing. © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 2 SECTION 5. DEFAULT. If Purchaser does not fulfill the obligations under this Offer, the above mentioned Initial Deposit shall be forfeited by Purchaser and shall become the property of Seller. SECTION 6. TIME IS OF THE ESSENCE. Time is of the essence with respect to all provisions of this Offer. SIGNED BY: __________________________________ [BUYER’S NAME] ACCEPTED BY: __________________________________ [SELLER’S NAME] Comment: This form needs to be totally revamped. For instance, there is no section stating the amount of loan, maximum interest to be paid, or maximum loan fees the buyer is willing to pay. What are the “additional financing terms”? Overall, a prospective buyer is further ahead to use a contract form, and then have a clause in the form which basically says that the attorneys for the parties have so many days to propose modifications. © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 3 OFFER TO PURCHASE REAL PROPERTY [INFORMATION ON FORM] Once you find real property you want to buy, whether it is your home or piece of investment property, the next step is to write an offer. An offer is more complicated than it sounds because you can’t just name a price and move on. Before you use this form, you are going to want to think about a host of issues that may affect the transaction. Your offer is the first step toward negotiating a purchase-sale contract with the seller. Since this is just the beginning of negotiations, you should put yourself in the seller’s shoes and imagine his or her reaction to everything you include. Your goal is to get what you want, and imagining the seller’s reaction to your offer will help you attain that goal. For example, if you offer too low of a purchase price or demand too many concessions, you run the risk of insulting the seller. As a result, the seller may ignore your offer or worse, deposit your offer in his trash can. Your goal is to offer jut enough so that the seller does not feel insulted and makes you a counter-offer. You should know that the offer is much more complicated than simply coming up with a price. Because of the huge dollar amounts involved, both you and the seller want to build in protections and contingencies to protect your investment and limit your risk. You are going to want to include other details of the purchase as well. Some details which you must think about are (1) how you plan to finance the home, (2) the down payment, (3) who pays closing costs, (4) what inspections are to be performed, (5) timetables, (6) whether personal property is included in the purchase price, (7) terms of cancellation, (8) any repairs you want performed, (9) which professional services will be used, (10) when you get physical possession of the property, (11) how to settle disputes should they occur, and (12) are there any contingencies. What are contingencies? A contingency is condition in the offer that must be resolved by either a buyer or seller. If it isn’t satisfied, then the sale generally doesn't move forward and neither party is penalized. You want to anticipate potential problems and make them contingencies in the offer so that if something does go wrong, you can cancel the contract without penalty. For example, some buyers often agree to purchase a home before selling their previous home. Therefore, you may want to make the closing of the sale of your current home a condition of your offer. If you do not include this as a contingency, you may find yourself making two mortgage payments instead of one. There are other common contingencies you should include in your offer. Since you probably need a mortgage to buy the home, a condition of your offer should be that you successfully obtain suitable financing. Another condition should be that the property appraises © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 4 for at least what you agreed to pay for it. During the escrow period you are likely to require certain inspections, and another contingency should be that the property passes those inspections. Contingencies protect you in case you cannot perform or in case you choose not to perform on a promise to purchase the property. If you cancel a contract without having built-in contingencies, you could find yourself forfeiting your earnest money deposit. Most departments of real estate, realtor associations, or brokerage firms have standard real estate purchase-sale contracts they use to make offers. Such forms generally cover many of the contingencies discussed above, if not more. For example, in the state of California, the California Association of Realtors publishes a form that is widely used by real estate brokerage firms. If you are purchasing real estate without a broker, agent, or lawyer, you likely will not have access to such forms. Accordingly, this form Offer to Purchase Real Estate may serve as an initial point for your negotiations. As referenced in Section 3 below, this form reflects the mutual intentions of the buyer and seller to work in good faith toward reaching a more definitive agreement. Such definitive agreement should cover in detail the host of issues and contingencies described above. © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 5
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