So, you found your ideal house, and you’ve been pre-approved for a mortgage. Congratulations! The next step is to send an offer to the seller. How exactly does that work, and who delivers your offer to the seller?
Home buying is never an easy or stress-free experience, and that’s even more true when you’re not familiar with the process. If this is your first time buying a home, it’s understandable that you have some questions and concerns about how things work. After all, this is a big decision! You want to do things right.
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Thankfully, delivering your offer to the seller is a simple process. Here’s how it’s done and who handles the paperwork.
Who Delivers Your Offer To The Seller?
Once you’ve written up your offer, it’s time to deliver it to the seller. But who does that? You or your agent? In fact, it depends on how exactly you’re conducting the purchase.
If you’re buying the house through a real estate agent, you don’t have to worry about anything. Your agent will deliver the offer to the seller’s agent or directly to the seller if they’re selling the home themselves. This used to be done face to face or via snail mail, but nowadays, it’s more common for agents to email the offer. If a property is in particularly high demand, your agent might even call or text the seller’s agent to tell them an offer is on the way. Either way, the seller will receive the offer, and they’ll be free to make a decision.
If you’re buying the house without an agent, guess who’s in charge? That’s right; you’re delivering the offer yourself! Email it to the seller’s agent if they have one. If the seller is also flying solo, just send your offer to them directly.
If you and the seller both have the same agent, things are even simpler. The agent will help you prepare the offer, then deliver it to the seller and explain it to them.
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What Is Included In A Buyer’s Offer?
Now that we’ve discussed the basics of delivering your offer, let’s talk about what a real estate offer actually is. Different offers can differ from state to state. However, there are several specific details that should always be included. Here’s what you should include:
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The property address, as well as any other identifying information. For example, you might include a lot number to further specify the property being transacted.
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The dollar amount you’re willing to pay. Many offers will also include an escalation clause. This is the higher amount you’re willing to pay if someone else has already outbid you.
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Your earnest money deposit. This is the amount of cash you’re willing to pay up front as a deposit, prior to the closing.
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Your down payment. This is the amount of cash you’ll pay at closing, typically around 6% of the total purchase price.
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Your financing terms. Unless you’re paying for the entire house in cash, you’ll need a mortgage. List the mortgage you’ve been pre-approved for, including the financial institution.
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Contingencies. Contingencies are any conditions you want to put on your offer. For example, you may want to have the home inspected first, or have the basement checked for radon gas. If your offer is conditional on these kinds of inspections, you’ll need to state that explicitly.
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Seller concessions. This is where you ask the seller to pay for a portion of the closing costs. Many offers will not ask for concessions, but they’re becoming more and more popular.
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Warranties. This standard clause states that the seller must provide a clear title.
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Closing and expiration dates. The closing date will usually be a range you and the seller can negotiate. If your offer has an expiration date, that should be set in stone.
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Additional paperwork. If you’ve been pre-approved for a mortgage, or if you have proof of income and assets, you’ll need to attach that information to your offer.
What Happens After You Present The Offer?
Once you’ve presented an offer, the seller will need to take time to consider it. Under normal conditions, this will take around 24 to 48 hours. However, sellers may respond faster to avoid losing the sale in a buyer’s market. During the peak of the 2020 lockdowns, some realtors were seeing turnaround times of as little as four hours.
Regardless, your offer letter should have included an expiration date. Whatever that date is, you’ll have to be patient and wait to hear from your agent.
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The seller will have three options to respond to your offer. First, they might accept the offer as written. This will often happen in buyers’ markets if the seller doesn’t think they can do any better. Second, they can reject the offer outright. This typically only happens if your offer was so low as to be unreasonable. In most cases, instead of rejecting an offer, the seller will instead send you a counteroffer.
What If You Receive A Counter-Offer?
When you receive a counter-offer, the delivery process works the other way around. The seller’s agent will deliver the offer to your agent, who will share it with you and go over the details. If you’re not working with an agent, you’ll receive the counter offer directly.
The seller will want to haggle over the purchase price in most cases. This is one area where it’s easy to get hung up on dollar amounts, when your interest rate is almost as important. Over the course of a 30-year mortgage, even a $5,000 price difference might only make a $20 difference in your monthly bill. So rather than ask yourself if you can afford the total purchase price, as how flexible you’re willing to be on the monthly payment.
Sellers may also want to make adjustments to contingencies and concessions. If they’re unwilling to agree to an inspection, you should tread very carefully. Otherwise, it can pay to be flexible. The easiest way to lose a seller is to ask for too many paid concessions. If you ask for a home warranty, title insurance, closing costs, and for them to pay for a home inspector, you’re probably asking too much. Remember, the seller is moving, too. The last thing they want is to pay for a bunch of extra fees. By taking on more of those costs yourself, you increase the odds of your offer being accepted.
When receiving a counteroffer, you’ll have the same options that the seller had when they received your initial offer. You can accept it as is, reject it outright, or send a new counteroffer of your own.
Can You Back Out After Delivering Your Offer?
Yes, you can back out of an offer. Real estate offers are not binding until you’ve actually signed a purchase contract. Until you’ve signed that contract, you’re free to walk away at any time. That said, there are some potential pitfalls you should be aware of.
Some unscrupulous selling agents will try to trick buyers into signing a contract. This will sometimes take the form of a contract submission form, or other paperwork given to you by the selling agent. If you sign something like this, you could potentially be agreeing to a sale, in which case you’re legally bound to proceed. This happened in Massachusetts in the case of McCarthy vs. Tobin. In that case, the seller’s counteroffer contained contractual language binding both parties to the sale. When the buyer signed it, they inadvertently signed a purchase contract, not just an offer.
This is one of many reasons it’s helpful to work with a real estate agent, or at the very least a real estate attorney. They’re familiar with real estate offers and contracts, and they can easily spot this kind of bogus paperwork. Before you sign anything given to you by a selling agent, make sure to get professional advice. An hour of a real estate attorney’s time is a lot less expensive than a house you didn’t want.
Summary
Delivering an offer to the seller is an integral part of the home buying process. Who delivers your offer to the seller depends on which path you took for the purchase. If you’ve got a real estate agent, they can take care of it for you, and you just have to verbally agree on the details. If you’re buying the home yourself, you’ll have to deliver the offer yourself. Either way, it’s just the first step in negotiating a final deal.
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