Offering to Purchase a Home

You've finally found your dream house. All that's left to do is make your purchase offer and close the deal. But you still have some work to do before you take that step.

When you are thinking of making an offer on a home, you should consider comparable sales, the results of the home inspection, how long the home has been on the market, and whether there are more homes for sale than buyers for them.

Then, when you are ready to make your offer, you will be filling out a form, also called a "binder," on which your offer is presented to the seller. This usually includes the price you want to pay, proposed closing date, any contingencies, and the amount of earnest money you are providing to show that you're serious about buying the house. It also includes an expiration date, so you won't be left hanging, wondering whether the offer has been accepted or rejected.

Contingencies usually include that your earnest money will be refunded and the sale canceled if you are unable to obtain a mortgage loan within a certain period of time. Another typical contingency is that the offer is dependent upon a clean inspection. If your inspector finds problems with the property, but you still want to purchase it, you can renegotiate for a lower price or require the seller to make repairs. Also, if you must sell your current house to be able to buy the new home, this can also be added as a contingency to the offer to purchase.

The title must be free and clear of all other claims, and a title search is usually performed by a title company as one of the requirements when you are attempting to get your mortgage loan.

The binder also requires the seller to transfer title to the property to you on or before a certain date, and when that closing date arrives, you are committed to purchasing the property, so you loan will need to be approved by that date as well.

Earnest money is usually $1,000, though you can put down anywhere from $500 to $2,000. When the sale is confirmed, this money is applied to the down payment. If you change your mind or are unable to obtain a loan to purchase the property, your money is usually forfeited unless your binder states that earnest money is to be refunded under certain conditions.