Congratulations! After a long process of scrimping, saving and searching,you have found your dream home. You have decided to make an offer. Now what?There is a bit more involved than dickering over the price of the house…
The first rule buyers should remember is that no contract for the saleof real estate is valid unless it is in writing. There is no such thingas an oral contract to sell real estate. Therefore, both sellers and buyersmust strive to obtain a written purchase contract. There are different customswith regard to the manner in which the parties reach that purchase contract.In many parts of New England, REALTORS use a fill-in-the-blank purchaseagreement form to type in the terms of the offer.
The buyer will be askedto sign the form once the terms of the offer have been completely written.If the seller accepts the offer, the seller will also sign the form. Thisform then becomes the written purchase contract.
In other parts of New England, particularly Fairfield county CT, therealtor will use a “binder” or “offer-to-purchase” formto write the terms of the offer. The important thing to remember about offer-to-purchaseforms is that these forms are not contracts even if the form is executedby the seller. In those parts of the state where offers-to-purchase areused, it is necessary to retain an attorney who will draft the terms ofthe purchase contract. This means that the seller has no legal obligationto sell the property to the buyer until both have executed the purchasecontract, even though the seller may have verbally agreed to an offer orsigned the offer-to-purchase form. For this reason, it is usually in thebuyer’s best interest to see that the purchase contract has been draftedby the attorneys and executed by the buyer and seller.
Binder forms differ from offer-to-purchase forms and purchase agreementforms. Some places in New England use a binder form to write up an offerto buy. What’s more confusing is that one type will become the purchasecontract once the form is executed by the seller and the other type of binderform is no more than an offer-to -purchase bearing the binder label. A buyershould read the form, ask the REALTOR with whom they are working or thebuyer’s attorney if the form labeled as a binder is actually a contract.If not, the seller is bound not to sell the property even if the sellerexecutes the so-called binder. And, as in the case of the offer-to-purchasementioned previously, a buyer who spends money on the inspection of propertydoes so at his or her own risk until the purchase contract has been draftedby the attorneys and executed by the buyer and seller.
There are certain items that should be covered in any offer-to-purchase.Obviously, the sale price is critical, but there are other items equallyimportant. The financing terms which the buyer seeks are very importantand a vital part of any offer. Buyers can also select from a wide varietyof possible inspections which can be performed on a property. These includebuilding inspections, well water testing, septic system inspections, radontests and a myriad of other types of inspections. Usually these tests mustbe performed at the buyer’s expense. Finally, any personal property or fixturesassociated with with the property which the buyer wishes to include in thepurchase should be specifically set forth in the offer to the seller.
Buyers wishing to make an offer on a property can obtain assistance fromthe REALTOR with whom they are working or their attorney. REALTORS are trainedto explain the clauses contained in the forms which they use and to fillin the information required by those forms. The REALTOR can also provideinformation on constructing the offer which the buyer wishes to make. Forlegal advice or to review purchase agreements, buyers should seek the adviceof their attorney.
Lisa G. Governale has been director of communications for the ConnecticutAssociation of REALTORS for the past ten years. Her articles on a wide varietyof real estate industry topics have appeared in trade, professional andconsumer periodicals and journals.
Connecticut Association of REALTORS®
111 Founders Plaza, 11th floor
E. Hartford, CT 06108
Title insurance for your home is critical to make certain that you are the actual owner of your property. Most home owners do not think about protecting the title to their home. This story will help home buyers understand the importance of title insurance. A slight...
As predicted in the Mortgage Almanac's winter issue, President Clinton and the Congress have agreed on legislation that gives home owners much bigger savings on capital gains taxes when they sell their homes. Until this year, only home owners 55 years of age or older...
Connecticut, Florida, Massachusetts, New York, North Carolina, Rhode Island and South Carolina residents can use our mortgage locator service by clicking purchase or refinance and completing the on-line application. A loan officer who specializes in condominium and...