Completing Your Offer To Purchase

Completing your offer to Purchase

Writing an Offer to Purchase Real Estate
Once you find the home you want to buy, the next step is to write an offer – which is not as easy as it sounds. Your offer is the first step toward negotiating a sales 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 reactions will help you attain that goal.

In an offer to purchase real estate, you include not only the price you are willing to pay, but other details of the purchase as well. This includes how you intend to finance the home, your down payment, who pays what closing costs, what inspections are performed, timetables, whether personal property is included in the purchase, terms of cancellation, any repairs you want performed, which professional services will be used, when you get physical possession of the property, and how to settle disputes should they occur.

Determining Your Offer Price

When you prepare an offer to purchase a home, you already know the seller’s listed price. But what price are you going to offer and how do you come up with that figure?

Determining your offer price is a three-step process.

  First, you look at recent sales of similar properties to come up with a price range. Then, you analyze additional data, such as the condition of the home, improvements made to the property, current market conditions, and the circumstances of the seller. This will help you settle on a price you think would be fair to pay for the home. Finally, depending on your negotiating style, you adjust your “fair” price and come up with what you want to put in your offer. Also, your REALTOR may be able to tell you the average list price-to-sales price ratio for the area that the house is in.

Comparable Sales
The first step in determining the price you are willing to offer is to look at the recent sales of similar homes. These are called “comparable sales.” Comparable sales are recent sales of homes that compare closely to the one you are looking to purchase. Specifically, you want to compare prices of homes that are similar in square footage, number of bedrooms and bathrooms, garage space, lot size, and type of construction.

There are two main sources of information on comparable sales, which are easily accessed by a real estate agent. It is somewhat more difficult for the general public to access this data, and in some cases impossible. These information sources are the public record and the Multiple Listing Service.

Items to Include in The Sales Contract

Earnest Money
In most cases, you will be expected to provide a deposit or earnest money payment with the offer. The check should be made to the listing real estate brokerage, who will keep the money in escrow until the negotiations are complete. Always get a signed receipt. Be sure that you will get your money back if the sale is not completed due to the seller or certain contingencies that you have written into the contract. If you decide to back-out of the contract, you will probably forfeit the deposit to the seller.
Expiration of the Offer
The standard Purchase and Sale form includes a provision for you to specify how long the seller may take to respond to your offer. This prevents the seller from keeping you in suspense while waiting for a better offer.


Personal Property Items
List the items you want to be included in the real estate sale. These non-fixtures may include curtains, appliances, workbenches, etc. Items that are physically and permanently attached usually are automatically included in the sale except when the seller specifically indicates the exclusions in the sales contract. It is best to specify any items you want included so there will be no misunderstanding.

Contingencies in an Offer to Purchase Real Estate
In most purchase transactions there may be a slight challenge or two, but most things will go quite smoothly. However, you want to anticipate potential problems so that if something does go wrong, you can cancel the contract without penalty. These are called “contingencies” and you must be sure to include them when you offer to buy a home. Contingency clauses can protect you from possible problems or events. The more experienced your real estate attorney or agent, the greater protection he or she can build into the offer to purchase.

Here are some 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 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 it passes those inspections.

Contingencies protect you in case you cannot perform or choose not to perform on a promise to buy a home. If you cancel a contract without having built-in conditions and contingencies, you could find yourself forfeiting your earnest money deposit.

Closing Date / Transfer of Possession
Your offer to purchase should also include your proposed closing date. On this date you will meet with the bank, seller and attorneys to formally purchase and pay for the house.

A transaction is considered “closed” once the deeds have been recorded. Then you own the home. Typically, in our area, the closing and possession dates are the same. However, it is not always possible for you to occupy it immediately. This can happen for several reasons, but the most common is that the seller may be purchasing a home, too. Usually, their purchase is scheduled to close simultaneously with your purchase of their home – but try to be as flexible as possible if “glitches” arise.


  Once you have completed and double-checked the contract, it is presented to the seller. If the seller accepts everything in the contract, including the price and all of the contingencies, the offer becomes binding on both the buyer and seller subject to the contingencies. If the seller wishes to negotiate, a counteroffer is made with either a new contract or with notations and substitutions made on the original document. You then receive the revised contract and can either sign it, if acceptable, or reject it and make a second offer.


Watch what you say within ear-shot of either a real estate agent or a seller. Everything you say can, and will, be used in the negotiating process. For example, if you submit a contract with a figure lower than the listed price, don’t let the seller’s real estate agent know that you are willing to pay more. Never confide your negotiating strategy. In Vermont, a real estate agent is legally bound to the seller unless you have engaged a buyer’s broker or agent who will represent you, the buyer. Is Buyer Agency Right For You?

Don’t respond to any suggestions or counteroffers unless they are presented in writing. For example, if a seller or his agent tells you that your offer is too low, insist on a written counter-proposal indicating the price (or other changes) that would make your offer acceptable. Don’t feel pressured into raising your price on the spot.

If the seller agrees to make repairs (based on negotiations following a home inspection report) insist that they be done by contractors that you, the buyer, select and that the improvements be completed under your supervision. Otherwise, the work could be poorly done with incompetent labor and /or inferior materials.

Never submit a contract to a buy a house after seeing it only once! Return for another look the following day or weekend, and again, if necessary. Visit the house immediately after a rain or heavy snow, if the weather cooperates, to see if there are visible water problems. Don’t be embarrassed to revisit the houses you like most. Remember, you don’t really “see” a house on the first visit but find yourself focusing on features like wallpaper, a great master bathroom, or garage space. You may have little or no memory or even an inaccurate impression of the rest of the house.

Keep in mind that Federal Housing Administration (FHA) and Veterans Administration (VA) loans do not allow the financing of points. Any points in financing these loans must be paid in cash by you or by the seller. A seller’s willingness to negotiate may depend on the market and how anxious he or she is to sell. In a tight market or if the seller has to move, he or she may be willing to pay points.

Shop around for the best mortgage terms. Get Pre-qualified to know what you can spend and do not view real estate that is above your qualifications. The lender with the lowest interest rates may also have the highest closing costs. You may be able to negotiate with your lender to waive or reduce certain fees if the competition among lenders is strong. Your REALTOR can help guide you through the maze of financing alternatives that are available.


Negotiating to buy a house is the process of telling sellers and their real estate agent at what price and on what terms you are interested in their property. Many buyers don’t realize they are allowed to negotiate on any feature of the transaction. This is where the services of a buyer’s broker or agent can be valuable.

Expect to make compromises. Do not be afraid to ask questions. Doing your homework will help you buy a house with the confidence and knowledge that you have made the best decisions.

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