Real Estate Deal Analysis & Advice

The 6 Basic Elements of Every Real Estate Offer

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Every real estate offer can basically be boiled down to the who, what, where, when, why, and how of the deal.

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  1. WHO is making the offer and to WHOM?
  2. WHAT is being bought and for WHAT amount?
  3. WHERE am I getting the funds? (the financing)
  4. WHEN am I planning to buy it? (the closing date)
  5. WHY would I back out of this offer? (the contingencies)
  6. HOW is this all going to happen? (the fine print)

In essence, everything from a transaction can be summed up in this.

When offering on a deal on the MLS, your agent will likely walk you through every step of the document, but if you are offering on a property directly to a seller without an agent, you are on your own. Therefore, let's go through these elements in a bit more detail.

The WHO and WHOM are fairly obvious when you’re making an offer. The WHAT and WHEN should be clear as well. So let’s focus on the WHERE, WHY, and HOW.

Related: 16 Tips for Getting Your Offer Accepted

Where Are You Getting the Funds?

When you submit an offer, you’ll likely include what kind of financing you’ll be using for the purchase. Will you be using all cash? Will you be obtaining conventional financing through a local bank? Will you be using private or hard money?

Most sellers want to know this information before they allow you to tie up their property for the next month or two only to back out at the last moment because you can't actually buy it. If you are using financing, it can help to provide a letter from the lender showing that you have already been approved for a loan (known as a pre-approval letter).

Related: How (and Why) I Offer on Properties BEFORE I Ever Step Foot in the House

Why Would You Back Out of the Offer?

In other words, what are the contract contingencies? Can the buyer back out if they can't obtain financing? What if they find some surprise problems during the inspection, like asbestos in the attic or plumbing that hasn't worked in a generation? What if the house appraises for far less than what was offered? Make sure your P&S document spells all this out.

How Will This All Happen?

In other words, the contract should spell out the exact process by which the sale will proceed. This includes all the small print that helps the title company or attorney know exactly how to move forward with the sale.

Any questions about the offering process?

Comment below!

Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He is a nationally recognized leader in the real estate education space and has tau...
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    Andrew Hoelzel from Fort Collins, CO
    Replied over 2 years ago
    On an assignment, do you still need to prove your own source of funds as you are instead going to market the opportunity to another cash buyer?