Understanding The Offer
The Purchase Agreement — the foundation of which is the “Offer”— is the first and one of the most important documents you will deal with when purchasing a home.
While offering price is only one of many items in the purchase agreement that will make or break a deal, in most situations it is the most substantial item.
You’ll of course want to ensure you are not over-paying for the property — not only to ensure you don’t pay more than you need to — but also to ensure there will not be appraisal issues. We will research comparable sold properties (“comps”) to determine if the price you intend to offer is fair.
Keep in mind:
The market is dictated by supply and demand, so if there are competing buyers, and you truly want the home, you may have to offer more than if it were a slower market.
As discussed earlier in the “Buying Costs” section, the earnest money deposit is a standard, good-faith deposit demonstrating to the seller that you “earnestly intend to buy their property,” as long as you are still satisfied with it after your investigation period. The amount should typically be at least 1 percent of the offer price, and may be increased to instill more confidence in your offer.
3. Close of Escrow (“COE”) When would you like to close the transaction and get the keys? Typical time-frames for the length of escrow — from an accepted offer to closing the deal — vary and are negotiable, although 30 days is typical in the San Diego real estate market.
Before determining your desired closing date ensure that you’ve allowed sufficient time for completing your investigations and given your lender sufficient time to finish the loan.
By default, on the California Association of Realtors RPA form (the offer) the buyer is provided 17 days for property investigation contingencies, and 21 days for loan approval contingencies. This means that during those timelines, provided the buyer has not removed the contingencies, the buyer may cancel the deal for any reason provided for by existing contingencies and receive a full EMD refund.
5. Offer Acceptance Once the buyer and seller have come to a mutual and complete agreement, they are said to have reached a “binding agreement.” This begins the transactional process known in California as “escrow”!