Offer Acceptance
If the seller agrees to the original offer or a later counteroffer exactly as it is made and signs the document, the offer has been accepted and a contract is formed. Your agent must advise you of the seller’s acceptance and obtain the approval of the parties’ attorneys if the contract calls for it. She should provide the copy of the contract both to you and the seller.
An offer is not considered accepted until the person making the offer has been notified of the other party’s acceptance. When the parties communicate through an agent or at a distance, questions may arise regarding whether an acceptance, rejection, or counteroffer has occurred.
Because current technology allows for fast communication, many forms include a clause indicating that “return by electronic transmission, bearing the signatures of all parties, constitutes acceptance by the parties.” Both parties’ agents must transmit all offers, acceptances, or other responses as soon as possible to avoid questions of proper communication.
Don’t be alarmed if you start feeling out of breath and stressed at this point. You are not alone! Half of the buyers experience some level of buyer’s remorse.
If you feel regret or second doubts of your purchase, as I’ve said you are most certainly not alone. Even if you and your agent calculated each step carefully and made sure everything was perfect up until this point, it is only natural to feel these rushed feelings since a home is one of the biggest purchases you can make.
Try to dig deep to see what concerns you the most. Is it the size of the house, location, do you think there is another perfect house out there still? Share your feelings with your agent, she’s seen it all after all!
Keep in mind that although a mutual agreement has been established there are still some steps to go over. There are usually some additional conditions that must be satisfied before a sales contract is fully enforceable. These are called contingencies. Contingencies create a voidable contract; if the contingencies are rejected or not satisfied, then contract will be void. A contingency will include below three elements:
- The actions necessary to satisfy the contingency
- The time frame within which the actions must be performed
- Who is responsible for paying any costs involved
The most common contingencies include the following:
- A mortgage contingency, which protects the buyer’s earnest money until a lender commits the mortgage loan funds. In Pennsylvania, a mortgage contingency must state the type and amount of the loan, the maximum interest rate and minimum term, the deadline by which the buyer shall obtain the loan, and the nature and extent of assistance that the broker will provide in helping the buyer obtain the loan.
- An inspection contingency; a sales contract may be contingent on the buyer’s obtaining certain inspections of the property. Inspections may include those for wood-boring insects, lead-based paint, structural and mechanical systems, sewage facilities, and radon or other toxic materials.
- A property sale contingency, whereby buyers may make the sales contract contingent on the sale of their current home. This protects the buyers from owning two homes at the same time and also helps ensure the availability of cash for the purchase.
- An insurance contingency, whereby buyers may make the agreement of sale contingent on obtaining affordable homeowner’s insurance.
The seller may insist on an escape clause, which permits the seller to continue to market the property until all the buyer’s contingencies have been satisfied or removed. The buyer may retain the right to eliminate the contingencies if the seller receives a more favorable offer.
Once the seller accepts the offer, you may not secure the return of your earnest money deposit or any escrow money which you used to make the offer to purchase the home. The situation does not change even though the seller is not entitled to it until the transaction has been completed.
Under no circumstances does the money belong to the broker. If the funds are in the form of a check in connection with an offer to buy or lease real estate, then the broker may hold the check until the offer is accepted, at which time the check must be deposited into the trust account by the end of the next banking day. If the offer is not accepted, then the broker can return the uncashed check to the buyer or lessee. It is absolutely essential that these funds be properly protected pending a final decision on your disbursement.
To successfully arrive at closing, the property, title, and borrower need to be qualified. The sellers are responsible for delivering a good and marketable title and their property must appraise for an amount acceptable to the lender. This is to guarantee that you will be able to pay for the property. Cash-only buyers are few and far between, therefore most buyers must be approved for a loan. The process of obtaining a loan begins with you making an application. Check out this post to learn more about how your application can meet certain requirements, so that the lender can issue a formal loan commitment. The fundamentals of the process are the same, though there may be some procedural variations depending on who the lender is, especially if you are dealing with an online lender.
Most lenders at this point will require a home appraisal. While the appraiser does not determine value, neither is value determined by what the seller wants to get, what the buyer wants to pay, or what the real estate licensee recommends.
The appraiser, relying on experience and expertise in valuation theories, develops a supportable and objective report called that verifies the value indicated by the market. Sellers and licensees may not agree with the appraiser’s value, and may argue that it is than they think that it should be. However, since most appraisals are ordered by lenders, who base their loan on this value, the appraiser must be able to back up the appraisal report with quantifiable conclusions; in the event of a loan default, at what value can the property most probably be sold for the lender to recover the remaining loan balance.
Your agent should suggest independent appraisal be used to negotiate lower price offer; review seller’s comparables from your perspective.
Normally, a title search is not ordered until major contingencies in the agreement have been cleared, such as mortgage contingency. Before providing money for the loan, a lender generally requires a title search to as certain the condition of the title and ensure that there are no liens superior to the one the lender will file.
However sometimes, a preliminary title search is conducted as soon as an offer to purchase has been accepted. In fact, it may be customary to include a contingency in the sales contract that gives the buyer the right to review and approve the title report before proceeding with the purchase. A preliminary title report also benefits the seller by giving the seller an early opportunity to cure title defects.
Most states will require that the seller produce a current abstract of title title commitment from the title insurance company. When an abstract of title is used, your attorney examines it and issues an opinion of attorney’s opinion of title. This is a statement of the quality of the seller’s title, and it lists all liens, encumbrances, easements, conditions, and restrictions that appear on the record and to which the seller’s title is subject. Your escrow officer or attorney will be your main contact when solving any problems with the title.
