When you’ve found the right home and ready to submit an offer you and your agent will put the offer paperwork together and submit it to the Seller. These are the highlights of what you’ll see in the Agreement of Sale and much of the information that we’ll need to complete the offer.
For complete details please read the Agreement of Sale prior to signing it. In addition to the offer price, your offer will likely include the following items listed below. Prior to submitting an offer, please visit https://www.pameganslaw.state.pa.us/ for information on Megan’s Law.
The deposit (also called good faith money or earnest money) will become part of your down payment and closing costs at settlement. Your deposit will typically be split into two payments. The first payment will be made once the Agreement has been signed by all parties and the second payment will typically be paid after inspection negotiations are scheduled to be completed. If you terminate the Agreement you should get this money back as long as it’s done within the restrictions of the contract. Common examples of this is when a buyer terminates the purchase because of issues uncovered in the inspection or being unable to reach agreement with the seller on how to address inspection issues.
- Seller Assist
Seller Assist is money that you’re asking the seller to pay toward your closing costs. If you can avoid asking for money toward closing costs that’s generally better as it weakens an offer when asking for the seller to pay closing costs.
- Transfer Tax
Transfer Tax will typically be split evenly between the buyer and the seller. For short sales and bank-owned properties the full amount of the transfer tax will usually be paid by the buyer.
- Valid Date
This is the date by which all parties must sign the Agreement isn’t signed by this date then it’s no longer valid. If negotiations continue past this date a revised Agreement will be written up with a new valid date.
The Agreement of Sale includes items that are automatically included with the purchase unless otherwise noted. Typically, we’d write in that items such as a refrigerator and washer and dryer are also included as additional items. Likewise, some items may be excluded from the sale if it’s agreed that the sellers will keep them. An example may be a particular light fixture that they intend to keep.Window treatments that are attached to the house, ie. by screws, are included with the sale unless otherwise noted. However, the current version of the Agreement of Sale isn’t clear on whether curtains are included or not. It’s best to clarify in the offer if you want to keep the curtains.
- Mortgage Contingency
If you’re financing your home you’ll likely make the purchase contingent on being able to get a mortgage at specific terms including the interest rate and type of mortgage. We will include a maximum acceptable interest of .5% higher than the anticipated interest rate to allow for fluctuations in rates that may occur before you lock in the rate with your lender.
- Inspection Contingencies
Most home purchases will be contingent upon home inspections. Typically, you’ll have 10 days to perform inspections, 5 days to negotiate concerns, and 2 days to decide whether or not to proceed with your purchase if you and the seller haven’t reached agreement on dealing with inspection issues. Most purchase contracts will allow buyers to terminate the agreement in writing, and get deposit monies refunded, during the initial 10 day inspection period or during the 2 day decision period. Most home purchases will include contingencies for a general home inspection, a wood-destroying insects inspection, and a radon test.Competing Offers: If you’re competing against other buyers in a multiple offer situation, one thing that you can do is exclude certain known issues from the contingency and/or exclude items whose estimated repair costs are under a certain dollar amount. This can make an offer stronger as sellers are very anxious about their sale falling through due to minor or known issues.
- Condo/HOA Docs
If you’re purchasing a condo or a home that’s part of a homeowner’s association (HOA), the seller must order the condo or HOA documents such as financials and rules & regulations within 15 days of having a signed purchase agreement. Once you receive the documents you’ll have 5 days to review the documents and decide whether or not you want to proceed with the purchase. I recommend having an attorney review these documents within your review period. If you have any questions about the condo or HOA documents they will need
- Home Sale Contingencies
If you need to sell your current home in order to purchase your new home, we’ll include a contingency stating that your home must be sold by a certain date and at a certain price.
- Appraisal Contingency
Your lender will order an appraisal for an independent assessment of the value of the home. An appraisal contingency allows you to terminate the agreement of sale and get a refund of your deposit if the appraised value is lower than the sales price of the home. There is some protection from low appraisals built into the mortgage contingency so having this additional appraisal contingency is generally only used in certain situations as it weakens an offer.
- Escalation Clause
An Escalation Clause is an option if there are multiple offers on the home. The clause automatically increases the offer price to a defined amount above the next highest offer but only up to a certain amount. For example, your offer may be for $300,000 and include an escalation clause of $5,000 above a competing offer up to a maximum of $325,000. If the next highest offer is $310,000 then your offer is automatically escalated to $315,000. If the next highest offer is for $330,000 then it would be the highest offer as your offer is limited to a the $325,000 maximum price.As a general rule you’re better off skipping the escalation clause and putting your offer in at the highest price you’re willing to pay when competing against other offers. Escalation Clauses can be confusing to sellers, especially if there are multiple offers that all include the clause. Many sellers just prefer a more straightforward offer.