When making an offer to purchase real estate many buyers think price is the only consideration. True, price is extremely important to most buyers and sellers, but there are several other aspects of the real estate sale that need to be considered too, including:
1. The Closing Date
The time frame for closing a sale does vary depending on the circumstances of the buyer and/or seller. A typical closing date for an offer letter is approximately five weeks from the offer date, but this is not a hard and fast rule. The seller is often reluctant to extend the closing date any further, as vendors are often looking for certainly, so that they can plan their future. Extending the closing date can at times weaken an offer. Bringing the closing date forward, ahead of five weeks, can put pressure on either party and could weaken or strengthen the offer depending on the circumstances. A shorter settlement period can create difficulties in arranging finance, temporary accommodation etc. The mortgage companies needs to be able to work within the time frame of the closing date.
2. Terms and Conditions
Deciding the terms and conditions of sale can be equally as important as price and is something that is frequently overlooked.
Terms and conditions can affect the strength of the offer and make it more attractive for the vendor or less attractive. It is an opportunity for the purchaser to add a list of conditions that could potentially stop the sale from proceeding. For example, the offer could be subject to the buyer obtaining 100% finance to his/her satisfaction.
3. Special Provisions
Many offers include special provisions where certain items need to be transfered to the buyer on settlement eg. refrigerator to stay.
4. Offer Expiration Date
The real estate offer might have a time frame for acceptance before it becomes null and void. Some buyers like to add pressure by insisting that the vendor signs the offer within a very short time frame. Usually 24 hours is ample time for the vendor to review and accept or reject the offer.
5. Down Payment
The down payment is the money that secures the Purchase and Sales Agreement (P&S). The vendor usually likes to see a higher deposit paid to show commitment and the buyer often tries to negotiate a lower down payment. If the down payment is particularly low then it could indicate to the vendor that the purchaser is not really serious about completing the deal. If the vendor is presented with two similar offers at the same time, the amount of each down payment could sway the decision.
6. Purchase and Sales Date
A formal Purchase and Sales Agreement (P&S) is more difficult to back out of than a simple letter of offer. A Purchase and Sale Agreement will formally state all the details of the offer including settlement date, the amount and date the deposit (real estate down payment) is to be paid and any penalties involved.
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