Making an offer on a home
Making an offer on a homeYou’ve found your dream home, and you’re ready to make an offer. To summarize my past columns, you need to present three things to a seller: a lender letter saying you’re preapproved for a loan, an earnest money check and a signed contract. Today we’ll begin to cover the basics of the offer, or contract.A friend of mine, who had been in the real estate business for a just a short time, called and said a buyer had phoned her and wanted to make a “verbal offer” on one of her listings. She asked me, “Can they do that?” Well, sure, anyone can make a verbal offer, but is it really any good? The answer is “no,” because it’s not legally enforceable. In my mind, a verbal offer is just “fishing.” If you really want to catch something, put some bait on the hook – put it in writing.The offer must be writtenSo first of all, the offer must be written. The offer specifies many things, including the price, terms and conditions of the sale. If the seller is including all the appliances or is offering to pay $2,000 towards your closing costs, make sure it’s written into the contract or there could be a dispute later. The whole idea behind having everything in writing is to ensure a smooth transaction, with everything spelled out. It makes for cumbersome reading (currently eight pages), especially if you’re not a real estate attorney, but everything is in there for a very good reason: to protect you.For example, take the common interest community governing documents clause. Now there’s a mouthful. Simply put, the contract states that you have a right to see any homeowners’ association documents and review them within a certain amount of time. If there’s a problem, you can “object” and terminate the contract. I had a home listed for sale, and we received an offer that the seller accepted. In the process of examining the HOA’s covenants, the buyer discovered a provision which limited the number of dogs allowed by a property owner to two. She had three, and as those of us with four-legged friends well know, most of the time we like them better than our own flesh and blood. She terminated the contract by stating the objection in writing and found a different home. I put the seller’s house back on the market and got another full price offer within three hours. Using the Colorado Real Estate Commission formWhen helping their buyers write an offer, realtors use the Colorado Real Estate Commission form, called an “Exclusive Right-to-Buy Contract.” It’s a pre-printed form with lots of blanks to fill in and boxes to check. You’ve seen the automotive commercials where drivers make their vehicles do all kinds of wild and crazy things – my favorite is the one where the drawbridge is going up, the ship is going under, and the idiot behind the wheel of the car tries to jump the gap. The car ends up balancing precariously on the edge, but miraculously gets all four wheels back on the road when the back seat passengers slide their seats forward. The disclaimer in these commercials always says, in tiny little print at the bottom, that these are professional drivers, implying that you should not attempt to do any of these stunts yourself. There should also be a disclaimer on the top of any contract to buy saying “Do not attempt without a realtor.” A realtor can and should be able to explain each and every line in the contract and the reason it’s there. When filling in the blanks and checking off the boxes, there are many decisions to make, and any one of them can turn out to be a bad decision if you don’t know what you’re doing. Making an offer on an FSBOWhat about making an offer to a FSBO (For Sale by Owner)? Do you need a realtor to help you write the contract? I once represented a couple who were looking for a home and saw an FSBO property that looked really nice from the outside. I arranged for them to see the inside and they decided to buy it. The husband asked me if I would still represent them and help them write the offer, even if the seller wouldn’t pay me a commission. (Since FSBOs don’t list, or offer, their property for sale through a broker, they don’t have to pay any commissions). That was a tough question – it’s essentially asking someone to do a job for you without getting paid. My answer was that if I say that I look out for my clients’ best interests, then I mean just that. Even if I wasn’t paid a commission by the seller, I would still represent them. In return, I asked them to do just one thing for me – refer their friends and family to me for future business.This story had a happy ending for everyone – the FSBO agreed to pay me a commission, the buyers bought the house, and the seller was so impressed with how smoothly it all went that he asked me to help him find a new home. But what if the seller had said “no” to paying me a commission – would I have still helped my buyers? Absolutely. The whole process is not about me, it’s about my clients. I believe that if I put my clients first, things will ultimately work out.So, the moral of this story is – if you think you’re saving money by going it alone, you could be headed for disaster. As I’ve stated before, it costs you nothing, as a buyer, to have realtor representation. We will help you write an offer that protects you and is in your best interests.Have a real estate question? Call, write or e-mail me at email@example.com, and I’ll answer it in a future column.Have a real estate question? Call, write or e-mail me at firstname.lastname@example.org, and I’ll answer it in a future column.
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Visual Journalist Chelsea Self can be reached at 970-384-9108 or email@example.com