How to Structure a Good Offer
THE MAJOR ELEMENTS OF AN OFFER
1) PURCHASE PRICE: Obviously, the big item. But all the other terms will effect how this is viewed. So let’s go over everything else first. Note: If the Buyer is asking the Seller to pay their Closing Costs it must be remembered that would be directly subtracted from the Purchase Price, giving us an “Effective Purchase Price”. (PP – CCs = EPP)
2) 2 CHECKS:
- a) EARNEST MONEY DEPOSIT: Is as described, it represents how “earnest” the Buyer is about the property and how much money they are willing to set aside while they do their “due diligence”. Usually 1% to 3% of the PP in our Market. Is refundable if the Buyer withdraws during the Due Diligence Period.
- b) DUE DILIGENCE FEE:This pays for the Buyer’s privilege of taking the house off the Market while they do their inspections, etc. Usually 10% of the Earnest Money Deposit. Note: Is non-refundable.
3) 2 DATES:
- a) CLOSING/SETTLEMENT DATE:The date the Buyer actually takes ownership of the home. Sellers usually like it ASAP. But Buyers need to set it up to accommodate their situation.
- b) DUE DILIGENCE PERIOD:The period of time the Buyer asks the Seller to take the home off the market while they do our inspections and process their loan. Usually 14 to 21 days. Longer than that usually requires a much larger DDF. All negotiations regarding repairs must be completed before the end of the DDP.
4) OTHER POTENTIALLY IMPORTANT TERMS:
- a) LOAN CONDITIONS
- b) CLOSING COSTS PAID
- c) HOME WARRANTY
- d) PERSONAL PROPERTY CONVEYED
- e) CONTINGENT UPON SALE OF ANOTHER HOME
- f) MISCELLANEOUS
Note: This is just a general guideline. Every deal is unique and all terms are negotiable.