Parts of an Offer

Making an offer in real estate is about more than just price. The terms of a deal have as much impact on a seller’s decision as price, especially in a multiple offer situation.

Contingencies

Contingencies are conditions that must be met before a real estate contract is binding. For example, a buyer could make an offer that is contingent on the sale of their home. If the buyer is unable to sell their home, then they can cancel the contract. The seller has now lost a lot of time and potentially money.

Contingencies can also go both ways. The seller could make the sale contingent on them finding a new house. The possibilities are limitless, almost any condition that would cause a party to the contract to want to back out can be turned into a contingency. Contingencies are usually viewed negatively since they pose a threat to the sale of a property.

Inspections

By law a buyer is allowed to conduct an inspection of the property they have made an offer on. However, the buyer can waive their right to the inspection for the entire property or a portion of a property. Waiving inspections outright is dangerous for all but the most experience investors, but a partial waiver could be beneficial for all buyers. For example, let say there is a property that a buyer would like to make an offer on. The property has a side building that is in poor shape and will need a lot of work. The buyer could waive inspections of the side building—equivalent to taking it as-is—while maintaining the right to inspect the main home. The buyer cannot request the seller make repairs to any portion of a property that they waived inspections for.

Appraisals

If a buyer is confident about their offer, they can waive appraisals—so long as they are paying in cash or their lender supports this. This can be beneficial in a hot market with buyers making offers over the asking price.

Closing

Usually closing is 45 days from an accepted contract, however some sellers need more flexibility when scheduling closing. Some sellers may need a shorter or longer closing period. Like everything else in a real estate contract, closing can be negotiated to meet the interests of both parties.

Rent-Back Agreements

Sellers timeframe for moving doesn’t always lineup with the closing date. Besides moving the closing date, another solution is to include a rent-back agreement. In a rent-back agreement the buyer will own the home and they agree to rent it to the sellers for a specified duration after closing as part of the sale.