Offer and Purchase & Sale

The offer is a complicated legal document and you must make sure you understand all of the clauses in it before you sign it. Don't let an agent gloss over any items as "standard" when you may be on the hook for money that you put down as earnest money. Getting deposits back is the number one complaint filed at the Mass. Board of Registration so don't take the process lightly.

The basic information items in an offer are:

• address or description of the property
• consideration (price you are offering to pay)
• date through which offer is valid
• date of closing (on or before....)
• contingencies (mortgage financing, home inspection, attorney approval, etc.)

Other names for an offer include contract to purchase, offer to purchase, purchase offer, and they come in all shapes and sizes. You will usually see some mention of a deposit (good faith) or earnest money, so called because the buyer has "earnest" intentions to buy the property. Never use cash and always make the check out to an attorney, real estate agency or a title company. Don't confuse the earnest money with a down payment, which comes later. If there are no competing buyers you may be able to get away with offering $500 instead of the more usual $1,000.

The more formal contract follows the initial offer, depending on the type of property and local customs. The "purchase and sale" agreement will have a lengthy legal description of the property, exclusions, fixtures, rights of buyers and sellers, and brokerage fees. An attorney's advice before you sign the contract is particularly valuable to first time homebuyers. Get the names of experienced lawyers from friends, family, coworkers, and real estate professionals. Use an attorney who specializes in real estate, if possible. If you are using a buyer's agent to assist in your home search, find out if their agency works with attorneys on a regular basis who have a good track record with their previous clients. Or, better yet, have they negotiated for discounted fees for their clients? Attorneys working with buyer agents are part of the buyer's team and know they can count on the real estate agent to be looking out for the buyer's best interest in the negotiations and settlement. Don't be shy about determining the attorney's fees for services and what services will be provided. The best attorneys are educators as well and will take the time to make sure you understand the complicated parts of your transaction.

Many trade groups or service associations promote the use of standard contracts in their day-to-day business. Home buyers can expect to see a "standard" contract that may have been designed for use by the local trade group for Realtors. One benefit of a standard contract is that is should have certain key elements that are important to a real estate transaction. But keep in mind that until the last decade, the real estate industry was focused on the selling side of the business and a standard contract may favor the sellers' interests. In the days before real estate agents offered Buyer Representation, unless buyers retained an attorney to help them or had personal knowledge of how to write an offer that protected them, they were expected to sign the "standard" form.

Do you have to sign a standard form when you make an offer on a house? No! You should be prepared for a little resistance though because many agents don't want to "rock the boat" by altering the standard form or deleting clauses. Fortunately, buyer agency has helped change their attitudes and good buyer agents will include protective clauses in any offer they help you write.

Obviously, some of these provisions are necessary in certain situations. The only way you can be fully protected is to have your attorney examine any purchase and sale agreement or binder, or any other instrument before you sign it.