Understanding the Importance of an Offer to Purchase Contract
Purchasing real estate is an exciting and rewarding process, but it is not as simple as purchasing a bag of groceries. There are contracts involved, transfer of title, loans, financing, taxes, and much more involved than the average sale and purchase of goods. A real estate professional will be necessary to help guide you through the process when purchasing real estate.
The first challenge one encounters when purchasing real estate is determining your buying power and the property that is best for you. It is essential to know your buying power, also known as how much you can afford to purchase in either cash or through financing. Viewing numerous properties and understanding buyer’s wants and needs will narrow your search to select the best property for you. You will want to determine these challenges prior to signing an offer to purchase contract so that you will not encounter future issues with the contract.
There are some factors that go into preparing an offer to purchase contract:
The objective of an offer to purchase contract is to reach an acceptable agreement between the buyer and seller so that the agreement is signed with the intention of moving the deal forward. A real estate professional skilled in explaining and drafting an offer agreement will be present to provide any explanations needed so that they are both in agreement about the terms of this written contract.
The identification of the property and price are the two most important features of the agreement. The below information is found in records stored at your local property appraiser’s office or tax records office.
- The exact address of the property
- The property’s legal description
- The owner of the record or title
- The price, including the down payment
- Any milestone payments as well
The main terms of the deal are included, but not limited to, the time frame of the deal. For example, the time of the inspection, appraisal, and other time sensitive items should be outlined to provide the buyer and seller have an understanding as to the process of the real estate transaction. In many cases, these facts are more important than the actual purchase price. Many sellers have specific qualifications or contingencies a buyer must meet when presenting an offer.
The times for an offer and acceptance are also a crucial part to the initial agreement. When presenting an offer to purchase, this is not an open-ended offer as it will expire. A buyer will typically place a reasonable time connected to the offer in order motivate the seller to agree and to control their offer liability in the event all the terms are accepted.
An offer to purchase is an important contract that must be taken seriously. It is a contract between you and the seller that provides the steps and stipulations that will allow you to move forward and shortly, purchase your new home.