Making Offer

Buying Tips - "Making An Offer"

In real estate, oral contracts are not legally binding. If a Buyer wishes to bid on a property, he must make a formal, written offer or proposal. Once written, the Buyer's real estate professional will present the offer to the Seller. (In some cases, this is all handled by the respective parties’ lawyers.) The following is the basic information needed during this critical phase.

What's in an Offer

The written proposal may include, but is not limited to, the property’s address and legal description, sale price, terms, earnest money, expiration date of the offer, prorating (adjustments) of utility bills, real estate taxes, insurance, contingencies, repairs and any other terms that may be important.

Earnest Money

Earnest money is a deposit given when making an offer. It demonstrates sincerity—“earnestness”—on the Buyer’s part. If the offer is accepted by the Seller, it becomes part of the down payment. If not, it is usually returned.

Contingencies

A contingency means that the purchase is subject to certain events occurring, such as the Buyer’s loan being approved, or the property passing the termite inspection. If the contingencies aren’t met, the offer is void.

Related Buying Tips

Buying Real Estate in Costa Rica

Property Purchase Process

Using a Real Estate Agent

Home Inspections

Making an Offer

Making a Counter-Offer

Closing the Deal

Registry & Title

Land Conversion Chart

Response

If the Seller accepts the offer, and signs an acceptance, the Buyer has a deal. If not, the Buyer is free to walk away, and cannot be held liable for the contract. The Seller may make a counter-offer, and the Buyer is free to accept it or not, or make his own counter-offer. Only when an offer is accepted and signed by both parties is the contract binding.

Negotiating

The potential Buyer may be in a strong bargaining position to make an offer below asking price if, for example, he is paying cash, or has been pre-approved for a loan. Conversely, in a “hot” Seller’s market, he may have to offer above the asking price to beat other bids.

The Buyer's bargaining position is affected by the reason the house is being sold. For example, the Seller is moving for job-related reasons or is divorcing and is in a hurry to sell, or is in no hurry and can wait for the right offer.

Counter-Offers

The Buyer's real estate professional will negotiate the often emotional, sometimes maddening details of offers and counter-offers. These may include may many contingencies, such as whether the Buyer or Seller pays points, who pays for any repairs to be made to the property, or the Buyer wanting to keep the recreation room pool table, etc.