The prevailing procedure for purchasing real estate in our Massachusetts market is a two-step process. Generally, the first step (offer) is prepared by the buyer with the buyer’s real estate agent. The second step (approximately two weeks later with a mortgage or one week hence with a cash sale), is the Purchase and Sales Agreement (known as the P&S) prepared by the buyer with the buyer’s attorney. The offer may contain various contingencies such as financing and inspection(s) of the premises.
An offer to purchase is prepared that includes but is not limited to:
- price offered
- date of expiration of offer (generally 24 hours or less)
- date of P&S (generally 1 to 2 weeks after offer) and date of closing (the actual purchase day)
- deposit amount and who will hold it in escrow (generally $1000 with offer (called a binder) and 5% of purchase price at time of the P&S) It is held by the seller’s attorney or listing agency, occasionally buyer agency.
- Contingencies (not necessarily limited to those below)
- Financing (date for commitment letter determined after discussing with lender)
- inspection (7 days or less to perform plus 1 additional day to back out, if necessary)
- for condominiums – review of documents and budget by attorney
- for multi-family homes – review of existing leases by attorney
A check for $1000 (binder) is written to the listing agency but not deposited until an offer is signed by both the buyer and the seller. If the buyer chooses to terminate the offer after the inspection, the $1000 binder is refunded. If financing is not obtained on the date set forth and the buyer has made a diligent effort to do so, the buyer may choose to terminate the P&S in writing, in which case all monies are refunded.
These are the forms you will be required to sign when making an offer.
- Offer Form (Contract to Purchase Real Estate) explained above
- Agency Disclosure (Massachusetts Mandatory Licensee-Consumer Relationship Disclosure) which defines whether the agent is working as a buyer’s agent, a seller’s agent, or a facilitator. I only represent buyers as a buyer’s agent, insuring I am working in their best interest. This form is signed at the first client/agent meeting.
- Lead Paint (Property Transfer Notification Certification for properties built before 1978) describes what knowledge and forms (if any) that the seller is providing and documents that the buyer agent has provided the necessary information to the buyer.
- Consent to Designated Agency which sets forth that a specific agent (Deb Stein) and not the other agents at Coldwell Banker will be representing you.
- In cases where the buyer and seller are both Coldwell Banker clients, there is one additional form called Notice of Designated Agency.
- A preapproval letter from your lender will be included with the completed forms.
- A photo or copy of the $1000 check (binder) written to the listing agency.
Although an offer can be prepared in a hard copy, this is unusual. Electronic signatures are acceptable and easy to do. I prepare the paperwork, email it to you to e-sign on a computer, phone or tablet. We go over the offer on the phone before you sign to insure it is exactly as you want it. Listing agents require that I electronically submit all paperwork in one PDF document.
Here are the questions to think about in order to fill out the offer (technically called Contract to Purchase):
- How much are you offering?
- Closing date? 8 weeks from offer but might be sooner or later than that.
- How much of the purchase price are you financing?
- 5% of purchase price will be held in escrow. Will deposit funds be available by the date of the P&S? Will remaining down payment be available by closing date?
- Any inclusions or exclusions other than those listed on MLS? (You can ask for stuff that isn’t listed – I once got a canoe and 2 kayaks included for my buyer since the seller had gone into an assisted living facility.)
- Are you going to do inspections? (This is at buyers’ expense.)
- Are you going for a non-traditional mortgage like FHA or VA? (I need to include that specific information in the offer.)
If your offer is accepted you will need:
- an inspector (right away)
- a real estate attorney to work on the Purchase and Sales Agreement. I can recommend one that will not charge to negotiate your P&S or review condo documents if he/she will also be your bank attorney.
- a lender (right away to get application process going if not already done)
- a glass of fine wine
If you do not have the above, I can supply excellent recommendations except for the wine. Maybe I should take a wine class so I can recommend that too.
Please let me know if you would like me to send you a blank offer form so that you can familiarize yourself with it.
