A Buyer's Guide:
Make an Offer

The reason a real estate offer is so lengthy is to clarify what happens when certain scenarios arise, and to protect the buyer's earnest money deposit from many of the possible scenarios that can play out before closing. What if the buyer can’t get financing? What if the seller won’t make lender-required repairs? What if the appraisal is lower than the agreed upon purchase price? What if the sky is purple on the day of closing? What happens if my dog eats the contract but only pages 47 and 52? What if, what if, what if? The offer spells out what, precisely, will happen should any of these events occur in order to prevent having to go to court. Once both parties agree and sign the offer, it becomes a ratified, enforceable contract.

Offers generally include:

Before you've signed the contract, you may rescind your offer at any time with no repercussions. Keep in mind that the seller may also decline your offer at any point before you've both signed the contract. After you've both signed the contract, the short answer is "Yes, you may terminate the contract, but whether you get your earnest money deposit back depends on the circumstances under which you back out."

The circumstances that allow you to cancel the contract are called contingencies (sometimes legally required disclosures act like contingencies). Contingencies are stipulations in the contract that must be met in order to proceed with the sale. 

You can actually terminate the contract at any time for any reason, but if it’s for a reason not stipulated in the contract, it’s likely that you will lose your earnest money deposit to the seller.

Whether the offer you make will be accepted by the seller depends on a lot of factors. The first and most obvious factor is price, but there are a variety of other terms or conditions that might sway a seller to accept or reject your offer depending on their personal situation. If someone has received a property as an inheritance, they may be more likely to accept a lower offer in exchange for a quick sale and not having to make repairs. If someone is buying a property but must sell a different property in order to close on the one they'd like to purchase, that person may be inclined to agree to a lower purchase price on the property they need to sell in exchange for a quick close.

In summary, you can make your offer more attractive by finding out what's important to the seller: price, selling quickly, cash offer, selling as-is, etc. Something else you can do to show you’re serious about buying is put down a large earnest money deposit, a gesture that indicates you're willing to lose that amount if you walk away for a reason not stipulated in the contract. A typical earnest money deposit offered to the seller is $1,000, but can be up to 10% of the home price in highly competitive markets.

While you might think that offering significantly more than the asking price will guarantee you the house, you should be prepared to pay cash for any amount offered above the asking price. Why? Because the lender doesn’t want to overpay for a property. If you offer more than what an appraiser deems the house to be worth, you'll end up paying the difference out of pocket, unless you have an appraisal contingency that allows you to walk away in the event of an appraisal coming in lower than your agreed purchase price.

At this time, Aloha My Home doesn't have the ability to make offers on specialty properties like the ones listed above. In time, we intend to make these options available to our customers.