Jim Valentine: Breaking down the offer
Jim Valentine on real estate
Many people are so seduced by the concept of buying their home that they forget to pay attention to the details. To paraphrase an old adage, this is where the devil hides. It is important that you understand what you are offering and ensure that it is what you expect in order to get what you think you are negotiating.
The best way to understand the offer is to break it down. The first thing we do when we receive an offer is to make an extra copy and highlight the items that have been placed in the empty areas. The major part of the offer is pre-printed, what we call the “passe-partout”. Details are important, so highlight every one of them, whether it’s a meaningful boilerplate or a filled-in blank. Sometimes there will be a change, a boilerplate element to personalize the offer, but not very often.
Take the time to read the master key, no matter how boring it may be for you. You can ask your agent before writing your offer for a copy of the blank offer form, so you can read it at your leisure without any real buying emotion. Ask your agent to explain anything you don’t understand.
Start by dividing your offer into four areas in your mind: 1. Monetary items; 2. Elements of time; 3. Terms of Sale; 4. Consequences of Performance or Failure to Perform. Each will have several related elements throughout the offering, and they should be able to work together in a cross-category way, not contradict each other.
The monetary elements are quite simple, what you pay, how you pay it and who pays what part of the transaction costs. Make sure you understand each line item. Do you know the real estate transfer taxes and how much will it cost you? Hint: On a $500,000 house, your RPTT share is $975. Your loan fees won’t necessarily be in the offer, so be sure to take them into account when looking at the financial side of the deal.
Throughout the offer, there will be deadlines for everything from accepting the terms you have offered to closing the escrow. In between, there are time limits for the completion of many elements of the transaction, including appraisal approval, loan approval, completion of inspections, and time for objections and inspection of securities. Make a schedule that will show you the dates you need to complete each item. Your agent can help you with this.
Terms of sale may include selling a home, getting a loan, inspections/surveys, occupancy or vacancy terms, repairs or completion items. The number and nature of conditions are endless, so make sure the ones that are included correctly represent what you are trying to accomplish, or if you are countered, that you can live with their request.
The consequences of performance or non-performance may include forfeiture of the deposit, cancellation of the agreement, penalties that have been agreed, etc. which pleases you.
It’s amazing how many times people go to buy a house and have no idea what they’re going to sign to complete the transaction. Take the time to understand it. Ask questions even if you don’t read it carefully, ask where certain things are that are important to you. Your agent can get you to this clause quickly and allay your concerns. The contract is binding and therefore consecutive. Make sure you understand what you are signing and that it commemorates your intention and desires.
Time spent understanding can save a lot of heartache later when you realize you’ve accepted something different from your expectations. Contracts are the essence of business. If you have questions, ask your agent or contact a real estate attorney for an explanation. The time and expense are worth it to ensure you have a smooth transaction.
When it comes to choosing professionals to help you with your real estate needs… experience is priceless! Jim Valentine, RE/MAX Realty Affiliates, 775-781-3704. [email protected]