When you make an offer to buy a home it is a good idea to understand what your offer says. Many people get so enamored with the concept of buying their home that they forget to pay attention to the details. To paraphrase an old saying, that is where the Devil lurks. It is important that you understand what it is you are offering and to make sure that it matches what you are expecting so you get what you think you are bargaining for. The best way to understand the offer is to break it down. The first thing we do when we get an offer is make an extra copy and highlight the items that have been put in the blank areas. Most of the offer is pre-printed, what we call “boilerplate.” The details are important, so highlight every one of them whether significant boilerplate or a filled in blank. Sometimes there will be a change, a boilerplate item to customize the offer, but not very often. Take the time to read the boilerplate, as boring as it may be to you. You can ask your agent ahead of when you write your offer for a copy of the blank offer form, so you can read it at your leisure without any actual purchase emotion. Ask your agent to explain anything that you don’t understand. Start by breaking your offer into four areas in your mind: 1. Money items; 2. Time items; 3. Conditions of the sale; 4. Consequences of performance or non-performance. Each will have several related items throughout the offer, and they must be able to work together inter-categorically, not contradict one another. Money items are pretty straightforward, what you are paying, how you are paying it, and who is paying what part of the transaction costs. Be sure you understand each line item. Do you know real property transfer tax and how much that will cost you? Hint: on a $500,000 house, your RPTT share is $975. Your loan costs won’t necessarily be in the offer, so be sure to factor them in when considering the financial aspect of the deal. Throughout the offer, there will be time frames for everything from time to accept the terms you offered to the close of escrow. In between, there are time frames for performance of many components of the transaction including appraisal approval, loan approval, inspection completions and time for objections, and title inspection. Make a timeline that will show you the dates by which you have to complete each item. Your agent can help you with this. The sale conditions can include the sale of a home, obtaining a loan, inspections/investigations, occupancy or vacancy terms, repair, or completion items. The number and nature of conditions is infinite, so be sure that those that are included and properly represent what it is you are trying to accomplish, or if you are countered, that you can live with their demand. Consequences of performance or non-performance can include forfeiture of the earnest money deposit, cancellation of the agreement, penalties that have been agreed to, etc. Performance is the easy part – do it all right and you will own the home on terms and conditions that you like. It is uncanny how often people go to buy a home and have no idea of what they will be signing to effectuate the transaction. Take the time to understand it. Ask questions even if you don’t read it closely, ask where certain things are that are important to you. Your agent can take you quickly to that clause and assuage your concerns. The contract is binding and therefore consequential. Be sure you understand what it is you are signing and that it memorializes your intention and desires. The time spent up front comprehending can save a lot of grief later when you understand that you agreed to something different than your expectations. Contracts are the essence of business. If you have questions, ask your agent, or contact a real estate attorney for an explanation. The time and expense are well worth it to assure you have an uneventful transaction. When it comes to choosing professionals to assist you with your Real Estate needs… Experience is Priceless! Jim Valentine, RE/MAX Realty Affiliates, 775-781-3704. dpwtigers@hotmail.com.
