ELEMENTS OF AN OFFER – AGREEMENT OF PURCHASE AND SALE
This agreement should be filled out by a professional such as a real estate agent or a lawyer as they will be familiar with the terms of agreement, exclusions, inclusions and critical dates as set forth in the agreement offer. All parties must understand that this agreement is a binding legal document and any violation of its terms for whatever reason may cause a situation that leads to legal ramifications. Always make sure that there are no grey areas or words that are conflicting to the reader as this may cause issues down the road.
THE FOLLOWING ARE THE ELEMENTS OF AN OFFER – AGREEMENT OF PURCHASE AND SALE:
Price- Usually, price is the most important component of an offer as it signals to the seller (or at least it provides a starting point) how much the purchaser wants the property. As an offer comes on the table, ahead of other offers, it provides an opportunity for that prospective purchaser to negotiate a price with the seller without facing other competing offers. There are times where the seller cares only about price and on the flip side sometimes the seller may have an emotional attachment to who will be “enjoying their home” in the future and therefore price may not be the only critical component to the Offer received.
Deposit- The deposit usually means an amount that is submitted with the offer “in good faith” of a starting point that signals a buyers interest in a property. Usually a deposit of > 10% represents a strong interest in a property and this deposit will be held in trust by the real estate brokerage and if the offer is rejected will be returned to the purchaser that submitted the offer. It is usually a “signal” to a seller of a home that a strong deposit means that someone is serious about the offer that they have put forward as well that they have the financial liquidity to see this transaction to closing.
Irrevocable Date – The irrevocable date is the date in which the offer on the table expires and becomes null and void. This irrevocable date is significant in that it keeps the offer alive and the only way this continues past the irrevocable date is if the offer is either countered or accepted by the seller. An experienced real estate agent and/or lawyer will be able to consult a prospective buyer on whether the inserted irrevocable date should be short (within 3 days) or longer.
Irrevocable Terms – There are a multitude of terms and variations of terms in an Offer which right off the bat may cause a real estate transaction to be severed. Sometimes there are factors on behalf of a potential purchaser that are more important than the price offered and if these become sticking points (non-negotiable) then it may be rather difficult to convince a seller of this term in the Offer. This sticking point may be an addition of a pool or fixing of a basement.
Inclusions / Exclusions- Sometimes it is the smaller details such as the inclusions/exclusions section which cause a real estate transaction to be severed. Most times in this category, it is the Inclusions section which provides for a lengthy battle between purchaser and seller. It is imperative that this section of the offer not be handled lightly as wrong wordings and items being overlooked could cause a deal to end up in the court system. A trained real estate agent will ensure that all items are categorized as either a fixture (permanently attached to the home) or a chattel (removable component in the home).
Closing Date- The closing date represents the future date in which home ownership is transferred to the hands of the buyer of the property. The real estate transaction has culminated and is the exchange of monies to seller and home to buyer. This is also the date that effectively title of the property is now in the hands of the buyer. This critical date is when both lawyers ensure that the process of this exchange occurs smoothly. Usually there are factors that can hold up this closing date such as if the sale of another home is contingent on monies to be paid over for this house or if there were problems with financing along the way.