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8. Offer and Negotiation
The starting point and ending point of every negotiation is the initial offer and the acceptance of the final offer. Because oral promises are not legally enforceable when it comes to the sale of real estate, buyers must enter into a written contract which starts with your written initial offer. Your offer will specify price plus all the terms and conditions of the purchase you want to negotiate. Here again is where your buyer representative provides a valuable service by using standard forms that have been kept up-to-date with changing real estate laws.
A. What an Offer Contains
- Legal names of all parties to the contract
- Property address and legal description
- Sales price, down payment, earnest money, loan amount and type of loan
- Personal property that conveys like appliances, fixtures and window treatments
- Which parties pay for what expenses like deed preparation, surveys, inspections, title examination, title insurance, recording fees, etc.
- The amount of seller contributions toward the buyer’s settlement expenses, if any
- Settlement date and possession date
- How property taxes, rents, association fees and insurance will be prorated
- Upfront requests for property repairs, cleaning or home warranty coverage
- Provisions for property, wood destroying insect & moisture, well, septic, walk through or other inspections
- Disclosure of brokerage relationships
- Government required seller disclosures regarding the condition of the property
- Government required disclosures concerning lead based paint or aircraft noise and accident potential zones
- Appropriate Addenda – Property Disclosure Statement, Contingencies, etc.
- Timeframes to have contingencies removed
B. Seller’s Response to Your Offer
Sellers have in mind the amount of money they want to net from the sale of their property. After reviewing your offer the sellers may do one of three things; accept it as written, counter one or more provisions or entirely reject it. If the seller rejects your offer, you are released of any obligation and the sellers cannot change their minds later.
The sellers may respond with a written counteroffer initialed with the changes they want to make. You are then free to accept their counter offer, reject it or make your own counteroffer. This process can repeat itself as many times as it takes for you and the sellers to come to a complete agreement about the sales contract. Your initial offer and all subsequent counteroffers are on the table as long as you let them stay there. You may withdraw an offer or counteroffer anytime prior to it being accepted by the seller.
Once an offer or counteroffer is accepted, by either party, negotiations are over and the terms of the sale are final.
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