This title reminds me a bit of that old School House Rock, "How a Bill Becomes a Law" - but in some ways, it's very similar. People may have no idea how an offer gets accepted and whether it's the buyer or seller, understanding the process can make you a more informed consumer.
When a buyer finds a home they want to buy they speak to their buyer's agent and write up an offer. That offer is a legal and binding contract that will state who is buying, who is selling, the legal description of the property, and any and all terms of the contract. This includes the price the buyer is willing to offer, closing dates and any additional terms. This contract will also include contingencies such as financing, home inspections, or other optional contingencies. These are provisions that need to be completed for the deal to close or finalize.
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As a buyer, it's important to write up a solid offer that is attractive, will win out against any other offers or multiple offer situations, and provides the best possible situation for both buyer and seller. The buyer may offer less than asking price, but this is a decision that the buyer's agent and the buyer need to come to an agreement on. In a hot market, offering less than full asking price will usually get your offer thrown out, however, offering over asking price in a hot market, could get your offer looked at much quicker. It's weighing the current market stability and determining what would be the best offer for both buyer and seller. Buyers don't want to pay any more than they have to and sellers want the most profit from the sale, obviously. It's finding a middle ground that the win-win for both were mutual acceptance thrives.
Once an offer is written up, the buyer's agent will present it to the listing agent, this is the agent that represents the seller or homeowner. That agent has a duty to submit the offer to the seller regardless of what the listing agent thinks about the offer. Even lowball offers must be submitted to the seller. Any and all potential offers have to be presented to the seller for them to make an informed decision. Of course, the seller can ask their listing agent for advice and suggestions when it comes to acceptance, rejection, or a counteroffer.
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The seller will look over the entire offer and decide whether they agree with the terms, reject the terms altogether, or counteroffer. Perhaps the offer price was too low, maybe the terms are not agreeable to the seller, or the closing date needs to be adjusted. Any and all changes to the contract, regardless of how minor, need to be approved and rewritten and signed off on by both the buyer, seller, both agents, and any other parties involved in the transaction other than the escrow, appraisers, and inspector.
If the offer is countered, it will be returned to the buyer for further examination. If the buyer agrees to the terms, then the contract is mutually agreed-upon and it moves on to pending. If there is a nether counter offer, the deal goes back to the seller, and back and forth untila mutual agreement is accepted. Sometimes, a mutual agreement can never be fulfilled and the transaction simply dies out in three days. If changes, offers, and counter offers are not agreed-upon with in three days of submission, technically the contract is dead. Of course, verbal communication could bring the deal back to life as long as everything has new dates on them and everybody agrees and signs off on the deal. Once mutual acceptance has happened the deal moves onto inspection, satisfying contingencies, pending agreement, and finally closing.
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For more information on the purchase and sale contract, writing up an offer, or any Palm Desert real estate news or details please contact me at any time.