THE HOME BUYING & SELLING PROCESS - OFFER & CONTRACT

When you find a home that meets your purchase objectives, it is time to make an offer to the seller. An offer is your proposal of what you will give to the seller in exchange for the home. More than just a price needs to be included in an offer.

The key components to an offer are 1) a complete description of what is being offered, and 2) a complete description of what is expected in return for the offer. The offer should include the full price and how that price is to be paid. It should also include a legal description of the property being purchased for exchange of the price paid. Contingencies, such as inspections and conditions of financing, may also be included in an offer.

The purchase of a home will require a contract between you and the seller. The contract is an agreement of who gets what, what they give in return, and how each party executes their obligations. Texas Realtors® use standard contracts written by state attorneys.

While offers on real estate do not have to be in writing, Texas requires written contracts for legal exchange of real property. Verbal offers are at great risk of misinterpretation and often sources of dispute. Even written offers can be a source of dispute if certain elements of the transaction are not included or the offer is unclear.

The Texas One To Four Family Residential Contract (Resale) is the most common document used to prepare an offer on a home. This contract is completed with the help of your Realtor® with all details of your specific offer. It is used on thousands of home transactions and has been through extreme audits to minimize risk of legal claims.

Completing this contract form is the easiest way to prepare an offer. Once you complete your offer and present it to the seller, the only requirement for full agreement is for the seller to sign it. There should be no need for any further documentation to create a purchase agreement.

Here are a few of the elements included in the purchase contract:

• • The names of the buyer and the seller
• • A description of the property, its location, and any specific details of what will be transferred
• • Sales price including method of financing and cash portions
• • Earnest money
• • Title policy and survey details
• • Property condition including requirements of disclosures and inspections
• • Closing schedule and instructions
• • Possession of the property after closing
• • Who pays settlement expenses and fees
• • Termination option by buyer and any associated fees and schedule
• • Any addendum to the contract that becomes part of the contract.

Your Realtor® can fill in the standard contract based on your proposal to form your offer on the home. The seller can either accept your offer by signing it, provide a counter-offer for you to sign, or reject your offer. You should note that if the seller provides a counter-offer, it is a rejection of your original offer. You are not obligated to sign the counter-offer nor proceed with your original offer since the seller is rejecting it.

Once you and the seller have signed an offer (contract), the clock starts for your escrow period. This is the period of time between the contract effective date and closing.

You will have to submit your earnest money and any option fee as soon as possible to your Realtor® so he can get it to the escrow agent. If this is not done within the required time, you risk legal action. Your Realtor® can help with the requirements, but you are always advised to consult your own attorney for any contract you sign.

The termination option can be considered an escape clause and you will have the option to terminate the contract for any reason (even if you just do not want the home any more). If you choose to terminate with this option, it must be within the agreed time period and you will lose your option fee.

You will want to reach an agreement with the seller as soon as you can once you’ve made an offer. This is the reason why the actual contract is used to prepare your offer. Only the seller's signature is then required to reach an agreement on your offer and you are on the way to owning your new home.