Offer To Purchase Highlights
The Offer To Purchase will most likely be the most important document in your home buying or selling transaction. Here’s a few highlights of the WB-11 Residential Offer To Purchase to help prepare you.
Earnest money is a deposit to a Seller showing the Buyer's good faith in a transaction. A personal check from the Buyer is acceptable and is made out to the listing agent’s broker’s trust account. The earnest money is credited back to the Buyer at closing. (If the Offer cancels, the disbursement of funds is explained further on page 8 of the Offer To Purchase.)
A financing contingency expresses that the offer is contingent on the Buyer being able to secure financing for the house. This contingency lists the type of loan, the down payment amount, the term of the loan and the interest rate as well as establishes a timeframe for the Buyer to obtain their financing. The contingency is removed when the Buyer submits a loan commitment from their lender to the Seller prior to the contingency expiring. The contingency protects the buyer in the event they are unable to get approved for a loan within the specified timeframe.
A prequalification letter from the Buyer’s lender is typically submitted with the Offer to show they’ve started the financing process and provide some reassurance to the Seller that they qualify initially for the terms specified in the financing contingency.
Contingent on appraisal means the Offer requires the appraisal to be at or above the offered contract price within a specific timeframe. The Buyer’s lender orders the appraisal and is part of their closing costs.
This is an important section to read through on the last page of the Offer To Purchase. An inspection contingency gives the Buyer the right to have the house inspected by a Wisconsin registered home inspector within a specified time period at the Buyer’s expense. A Buyer can only have inspections done that are authorized in the Offer. Within this timeframe, the Buyer must deliver to the Seller a copy of the written inspection report and a written Notice and/or Amendment listing the Defects to which the Buyer objects. “Defect” means a condition that would have a significant adverse effect on the value of the Property; that would significantly impair the health or safety of future occupants of the Property; or that if not repaired, removed or replaced would significantly shorten or adversely affect the expected normal life of the premises. If there are items a Buyer notices during the showing that they would like addressed, those items should be written into the Offer To Purchase. A Buyer must have permission separate from the inspection contingency in the Offer to have any tests done, including a test on radon, the well, the septic system, etc. A “test” is defined as the taking of samples of materials such as soils, water, air or building materials from the Property for analysis of these materials.
Closing of Buyer’s Property Contingency:
This type of contingency states the Offer is contingent upon a Buyer closing on their other property by a specific date. Typically there is a bump clause that accompanies this contingency that states if the Seller accepts a secondary offer, they may give written notice to the Buyer of the first offer to remove the contingency within a time specified in the offer (typically 48 hours) to remain in primary position. If the Buyer does not remove the Closing of Buyer’s Property Contingency in writing within the specified timeframe, their Offer becomes null and void and they are “bumped” from the Offer.
If you'd like a blank copy of the Offer To Purchase for you to read through or would like to meet to discuss this information further, please don’t hesitate to contact me.