Beginner’s Buying Guide Part 4: making offers

Great! You’ve found a place you want. Now you can ask your agent to submit an offer for you. The agent fills out a contract with all the relevant information; of course this includes how much you are willing to pay, but it also outlines a schedule for inspections and other conditions of the transaction and specifies who will pay for various costs that will be incurred.

In Colorado we have a standard contract for buying and selling real estate that has been developed by the state real estate commission. Licensed brokers are required to use this specific contract. It’s actually a really nice system, because you don’t have to be studying over every contract for a sneaky little bit of fine print that might catch you out. (If you live in a state that doesn’t use a standard contract it’s a good idea to have a lawyer look over any contract for you.)

Your offer will include a deadline by which the seller should respond. They can choose to accept your offer (yay!), reject your offer (boo!), or counter your offer (probably also yay!). If they accept, then the terms of the contract will be exactly as you outlined them initially. If they counteroffer, they will propose a different set of terms that you can reject, accept, or continue to negotiate. In a really hot market the sellers agent may just list a day and time that all offers are due, at which time they will review them and the seller will choose which one they want to accept.

You’ll be expected to make an earnest money deposit at the time of your offer. Some listings specify an amount, but generally any sizable sum is sufficient. Around 1% of the asking price is pretty typical. (If you’re dead set on a place sometimes placing a larger earnest money deposit can help swing the seller your way.) These days, with most offers being submitted electronically, it’s common to give the check to your agent who will submit a scan of it along with the offer. If your offer is accepted then the check gets deposited with the title company that will be administrating the closing. The earnest money doesn’t actually go to the seller until the sale is finalized, it is held in escrow by the title company. If you end up backing out of the contract for a valid reason (inspection issues, funding problems) you’ll get it back — as long as you keep up to date with all the deadlines that have been outlined.

Along with the contract and earnest money deposit, your agent will also send the pre-qualifying letter that you’ve gotten from a lender. They usually will also include a short cover letter that emphasizes the strengths of your offer. Sometimes buyers even write their own personal letter to the sellers about why they really want that particular home! You never know what little piece of information will be the one that will make a seller accept a one offer over another – it’s not always just about the price.

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