Home Buying Info & The Basics of Making An Offer

Scottsdale Home Buying

Understanding a little bit about the Scottsdale home buying process can help you make a more sound decision. This home buying resource center should help. Be sure to fill out a Buyers Request Form to get started.

The Basics of Making an Offer

A written proposal is the foundation of a real estate transaction. Oral
promises are not legally enforceable when it comes to the sale of real estate.
Therefore, you need to enter into a written contract, which starts with your
written proposal. This proposal not only specifies price, but also all the terms
and conditions of the purchase. For example, if the seller offered to help with
$2,000 toward your closing costs, make sure that's included in your written
offer and in the final completed contract, or you won't have grounds for
collecting it later.


REALTORS® have standard purchase agreements and will help you put
together a written, legally binding offer that reflects the price as well as
terms and conditions that are right for you.  Your REALTOR® will
guide you through the offer, counteroffer, negotiating and closing processes. In
many states certain disclosure laws must be complied with by the seller, and the
REALTOR® will ensure that this takes place.


If you are not working with a real estate agent, keep in mind that you must
draw up a purchase offer or contract that conforms to state and local laws and
that incorporates all of the key items. State laws vary, and certain provisions
may be required in your area.


After the offer is drawn up and signed, it is usually presented to the seller
by your real estate agent, by the seller's real estate agent, if that's a
different agent, or often by the two together. In a few areas, sales contracts
are drawn up by the parties' lawyers.

What is in an Offer?

The purchase offer you submit, if accepted as it stands, will become a
binding sales contract (known in some areas as a purchase agreement, earnest
money agreement or deposit receipt). So it's important that the purchase offer
contains all the items that will serve as a "blueprint for the final sale." The
purchase offer includes items such as:

  • address and the legal description of the property
  • sale price
  • terms: for example, all cash or subject to you obtaining a mortgage for a
    given amount
  • seller's promise to provide clear title (ownership)
  • target date for closing (the actual sale)
  • amount of earnest money deposit accompanying the offer, whether it's a
    check, cash or promissory note, and how it's to be returned to you if the offer
    is rejected - or kept as damages if you later back out for no good reason
  • method by which real estate taxes, rents, fuel, water bills and utilities
    payments are to be adjusted (prorated) between buyer and seller
  • provisions about who will pay for title insurance, survey, termite
    inspections, etc.
  • type of deed to be given
  • other requirements specific to your state, which might include a chance for
    an attorney to review the contract, disclosure of specific environmental hazards
    or other state-specific clauses
  • a provision that the buyer may make a last-minute walkthrough inspection of
    the property just before the closing
  • a time limit (preferably short) after which the offer will expire
  • contingencies, which are an extremely important matter and that are
    discussed in detail below

Contingencies - “Subject to” Clauses

If your offer says "this offer is contingent upon (or subject to) a certain
event," you're saying that you will only go through with the purchase if that
event occurs. Here are two common contingencies contained in a purchase offer:

  • The buyer obtaining specific financing from a lending
    institution: If the loan can't be found, the buyer won't be bound by the
    contract.
  • A satisfactory report by a home inspector: for example,
    "within 10 days after acceptance of the offer." The seller must wait 10 days to
    see if the inspector submits a report that satisfies the buyer. If not, the
    contract would become void. Again, make sure that all the details are explicitly
    stated in the written contract.

Negotiating Tips

You're in a strong bargaining position, that is, you look particularly
welcome to a seller, if:

  • you're an all-cash buyer
  • you're already have a preapproved mortgage and you don't have a present
    house that has to be sold before you can afford to buy
  • you’re able to close and take possession at a time that is especially
    convenient for the seller

In these circumstances, you may be able to negotiate some discount from the
listed price.

On the other hand, in a "hot" seller's market, if the perfect house comes on
the market, you may want to offer the list price (or more) to beat out other
early offers.

It's very helpful to find out why the house is being sold and whether the
seller is under pressure. Keep the following considerations in mind:

  • every month a vacant house remains unsold represents considerable extra
    expense for the seller
  • if the sellers are divorcing, they may want to sell quickly
  • estate sales often yield a bargain in return for a prompt deal

Earnest Money

This is a deposit that you give when making an offer on a house. A seller is
understandably suspicious of a written offer that is not accompanied by a cash
deposit to show "good faith." A real estate agent or an attorney usually holds
the deposit, the amount of which varies from community to community. This will
become part of your down payment.

Buyers: the Seller's Response to Your Offer

You will have a binding contract if the seller, upon receiving your written
offer, signs an acceptance just as it stands, unconditionally. The offer becomes
a firm contract as soon as you are notified of acceptance. If the offer is
rejected, that's that - the sellers could not later change their minds and hold
you to it.

If the seller likes everything except the sale price, or the proposed closing
date, or the basement pool table you want left with the property, you may
receive a written counteroffer including the changes the seller
prefers. You are then free to accept it, reject it or even make your own
counteroffer. For example, "We accept the counteroffer with the higher price,
except that we still insist on having the pool table."

Each time either party makes any change in the terms, the other side is free
to accept, reject or counter again. The document becomes a binding contract only
when one party finally signs an unconditional acceptance of the other side's
proposal.

Buyers: Withdrawing an Offer

Can you take back an offer? In most cases the answer is yes, right up until
the moment it is accepted, or even in some cases, if you haven't yet been
notified of acceptance. If you do want to revoke your offer, be sure to do so
only after consulting a lawyer who is experienced in real estate matters. You
don't want to lose your earnest money deposit or find yourself being sued for
damages the seller may have suffered by relying on your actions.

Sellers: Calculating Your Net Proceeds

When an offer comes in, you can accept it exactly as it stands, refuse it
(seldom a useful response) or make a counteroffer to the buyers with the changes
you want. In evaluating a purchase offer, you should estimate the amount of cash
you'll walk away with when the transaction is complete. For example, when you're
presented with two offers at the same time, you may discover you're better off
accepting the one with the lower sale price if the other asks you to pay points
to the buyer's lending institution.

Once you have a specific proposal before you, calculating net proceeds
becomes simple. From the proposed purchase price you can subtract the following
costs:

  • payoff amount on present mortgage
  • any other liens (equity loan, judgments)
  • broker's commission
  • legal costs of selling (attorney, escrow agent)
  • transfer taxes
  • unpaid property taxes and water and other utility bills
  • if required by the contract: cost of survey, termite inspection, buyer's
    closing costs, repairs, etc.

Your present mortgage lender may maintain an escrow account into which you
deposit money to be used for property tax bills and homeowner's insurance. In
that case, remember that you will receive a refund of money left in that
account, which will add to your proceeds.

Sellers: Counteroffers

When you receive a purchase offer from a would-be buyer, remember that unless
you accept it exactly as it stands, unconditionally, the buyer is free to walk
away. Any change you make in a counteroffer puts you at risk of losing that
chance to sell.

Who pays for what items is often determined by local custom. You can,
however, negotiate with the buyer any agreement you want about who pays for the
following costs:

  • termite inspection
  • survey
  • buyer's closing costs
  • points paid to the buyer's lender
  • buyer's broker fees
  • repairs required by the lender
  • home protection policy

As a Seller you may feel some of these costs are none of your business, but many buyers -
particularly first-timer buyers - are short of cash. Helping them may be the
best way to get your home sold.

Please review the following links:

Please be sure to fill-out our Buyer's Request form