Mr. Teitle very graciously agreed to write a very informative article to help Home Buyers with an overview of what they can expect, and what they need to anticipate. Please note that this article does not eliminate the need for an attorney, and does not provide guarantees implied or express.
Justin A. Teitle
Attorney at Law
Teitle Law Offices, P.C.
You must also consider the terms you want to include in your offer. In any residential purchase, the most common and important terms include the price, earnest money, closing date, and contingencies such as financing, appraisal, inspection and other contingencies (such as a contingency of selling your own home) or concessions (such as seller contribution to closing costs and prepaid items). A contingency is something which must occur for closing to happen. If a contingency included in writing is not satisfied, it generally results in the agreement terminating and the buyer’s earnest money being refunded.
Many people are not aware that Iowa law requires any home with a private septic system to pass a certified inspection prior to transfer. There are other topics you may want to cover in your offer, such as your right to review and approve any covenants, bylaws and rules associated with a Homeowners Association, as well as whether you are asking for any appliances or other personal property to stay with the house. As a buyer, you may also want the seller to provide you with a home warranty, covering certain items for a year after closing. The above list is not exhaustive, but includes the most common things you and seller will ultimately need to agree upon.
Assuming there’s nothing in the disclosures which causes you to change your mind, you are now prepared to tell the seller you would like to make an offer. In real estate law, agreements affecting real estate which are not signed and in writing are not effective. In other words, it is legally acceptable and practically speaking, generally expected to verbally discuss terms of an offer with a seller before putting them in writing in a formal written contract called an Offer to Purchase (“Offer”) or Purchase Agreement (“Agreement”). These are interchangeable terms in real estate. These discussions happen in most deals, and in some cases can also include email exchanges or text messages. Keep in mind however, that once a final written, signed agreement is made between parties, the law provides that previous emails or texts do not control, and both buyer and seller are legally bound by the “four corners” of the final document they signed.
As a FSBO buyer, you will also find that some sellers prefer a more formal approach to the negotiations, and will ask that you present any offer in writing, which is also a way for a seller to determine how serious you may be. In that case, you will need to take the step of contacting a real estate attorney to draft an offer before knowing for certain that seller is planning to accept it. Although there is some risk associated with spending a little time and money on such an offer, it may be necessary to get the discussion moving, and eventually needs to be done regardless if you come to an agreement with the seller. Otherwise, if you are able to have good preliminary discussions and come to verbal agreement on the basic terms with the seller, you are able to contact the attorney with confidence the offer is likely to be accepted.
It is important for a buyer to also bear in mind that any discussions, emails or texts are not a guarantee that the property is yours when a signed offer or agreement does not yet exist. For this reason, it is good to move as quickly as possible once you determine you want to formalize a deal, in order to avoid the disappointment of having a second buyer intervene with a better offer. Putting a short response deadline on your offer of 24-48 hours in not uncommon in this industry. Don’t be afraid to explain to a seller that it is important for you to know whether your offer is accepted quickly. Sometimes ongoing counteroffers or responses cause a deadline for acceptance to be missed, in which case the offer stands officially null and void.
The term “counteroffer” under contract law means to make a different offer, and it also constitutes a rejection of the most recent offer or counteroffer which has been made to you. As buyer, this means that if the seller makes a counteroffer to your original offer and you respond with another counter, seller can choose to reject your counter and walk away. In other words, once you reject an offer by making a counter to it, you have no right to go back and accept the last offer made to you, as the other party may choose to withdraw it. This becomes important in multiple offer situations. Your real estate attorney can advise you on the most effective way to approach these scenarios.
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