What Is an Offer to Purchase Real Estate?
An offer to purchase real estate - also known as a home buyer's offer letter or a real estate offer letter - is a formal document that outlines the basic proposed terms and conditions of the agreement between the potential buyer and seller in a transaction involving real estate. It is used to place a bid on a house or another private residence that is for sale.
Offers to purchase real estate can be either firm or conditional:
- Firm offers. The buyer is ready to buy the property without any specified provisions or conditions. If the seller accepts a firm offer, the transaction can be done without further negotiations;
- Conditional offers. This offer will be made only if a certain condition is met. Usually, it means the buyer wants to perform a home inspection or sign a mortgage agreement.
A land contract is a related document which is used when the seller needs to provide financing to the buyer so that the latter can make the purchase.
How Does an Offer to Purchase Work?
When the buyer makes a home purchase offer, a contract specifying this offer is drafted. Offers to purchase usually state the offer price, the terms and conditions of the offer, and set the timeline for the real estate transaction. The quality of the offer is almost as important as the price you are willing to pay for the property. After the buyer and the seller negotiate all the provisions, agree to them and sign the document, it becomes enforceable and legally binding. The offer constitutes the deed of sale between the two parties, which means that the buyer and the seller are now required to fulfill the responsibilities stated in the document.
How to Make an Offer to Purchase a House?
An offer to purchase a private residence must be properly written to avoid mistakes. Make sure you are comfortable with all the terms of the agreement before you sign it. Traditionally, this document contains the following information:
- Names of the buyer and the seller, and their contact information;
- Various conditions and contingencies attached to the offer, for example, a home inspection or a property appraisal. The seller should disclose all known defects, including the hidden ones; however, it is still important to have the residence inspected before you sign the papers;
- Description of the property or land;
- Purchase price and the payment method;
- Date when the offer expires;
- Signature of the offeror or the offeror's representative;
Additionally, the home purchase offer includes a signature line so that the offeree signs and thus makes acceptance. After that, the buyer sends the offer to the seller who makes a decision to accept or not to accept the terms of the agreement.