Who delivers your offer to the seller depends on whether you have a buyer’s agent or not. If you do, your buyer’s agent should submit your offer on your behalf to the listing agent. If you don’t have a buyer’s agent and wish to forgo your right to free buy side representation, then it’s okay to submit an offer directly to the listing agent.
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However, this isn’t recommended as you’d be turning down the opportunity to have a buyer’s agent guide and advise you for free.
If you are buying a house For Sale By Owner (FSBO), then you or your real estate agent can submit your offer directly to the seller. If you don’t have a buyer’s agent, you may be able to negotiate a discount on a FSBO listing by working directly with the owner since they will be saving on the typical real estate commission in NYC of 6% of the sale price.
The real estate offer process is straightforward after you figure out who delivers your offer to the seller. You’ll need to gather backup documentation for your offer such as a personal financial statement and a mortgage pre-approval letter. You’ll need to hire an attorney, figure out the basic terms of your offer and submit your offer through your buyer’s agent.
Gather and Prepare Supporting Documentation:
REBNY Financial Statement
You’ll need to complete and submit a REBNY Financial Statement with your offer for most listings in NYC. Coop apartment listing agents will absolutely require this personal financial statement for an offer to be considered, and even condo listing agents will ask for it as well.
Mortgage Pre-Approval Letter
You’ll need a loan pre-approval letter from your mortgage broker or bank if you plan on financing your purchase. Make sure you submit a pre-approval vs pre-qualification letter as the former is much more credible.
That’s because a pre-approval means a third party financial institutional has already partially underwritten your file and verified some of your documentation.
A pre-qualification letter on the other hand can be had with a 15 minute phone call with a mortgage banker and zero vetting.
Proof of Funds
You’ll need to provide proof of funds if you are purchasing all cash since you won’t be providing a mortgage pre-approval letter. A bank account statement or a brokerage account statement showing sufficient funds to purchase the property will do.
You should demonstrate that you have enough funds to not just cover the purchase price, but also closing costs and any post-closing liquidity requirements. It’s acceptable to cross out your account numbers for personal privacy.
It’s nice to provide the seller with some idea of who you are. As a result, most buyers include a paragraph or two about themselves with their offer. Feel free to have the biography be focused on your educational background and professional life and career.
Letter to the Seller
It’s not necessary to include a home buyer offer letter, but it’s certainly a nice move that may push a seller to choose you over another bidder. Make it personalized and heartfelt, and definitely don’t make the mistake of using the same template for each property you’re placing an offer on. Sellers will see right through a copy and paste job. It’s okay to combine this with your short biography.
You’ll want to provide your real estate attorney’s contact information if you are buying property in a state like New York where lawyers are required for contracts. Skip this step if you are buying property in a state where forms are standardized and simpler, and lawyers aren’t typically used for transactions.
Make sure you hire a lawyer who specializes in real estate transactions, especially if you are buying a home in a more unique market like NYC.
The last thing you’ll want is to hire your mother’s cousin who freelances as a lawyer and dabbles in everything from divorce law to litigation. Read our questions to ask your real estate attorney before you interview anyone.
Once you’ve hired an attorney, make sure to include their complete contact information in your offer email. This is important to demonstrate to the seller that you are serious about buying a place, so much so that you’ve already hired a lawyer.
Once you’ve gathered all of your supporting documentation, it’s time to submit your offer. Your buyer’s agent will gather everything in one email, and include your offer price, your anticipated down payment amount, your preferred closing date, any home buying contingencies, and any non-standard inclusions or exclusions.
Remember that offers without contingencies will be stronger and considered more favorably by sellers.
With that said, it’s fairly common to see a financing contingency if you will be purchasing with a mortgage. If you’re buying free-standing property such as a house or a townhouse, then it’s fairly standard to ask for a home inspection as well.
If you need to sell before you can buy, you may wish to ask for a sale or Hubbard contingency. Just keep in mind that having a sale contingency attached to your offer makes it very unattractive to the seller.
Don’t worry about inclusions or exclusions unless you’ve negotiated with the seller for a specific item to be included or not. The way inclusions typically work by default is that if you cut off the roof of the home and flip the home upside down, everything that doesn’t fall out because it’s attached to the property comes with the sale. That includes appliances, cabinets, shelves etc. but not unattached furniture such as sofas and chairs. Window blinds and curtains are often negotiated if the seller or buyer has a special interest or attachment to them.
Your buyer’s agent will ask for the listing to provide written confirmation of the receipt of your offer. After the offer has been received, there’s no set timeline for the seller’s side to respond to you, if they do at all.
Yes, you can back out of an offer at any point before signing a formal purchase contract. In most states like New York, it’s commonly known that real estate offers aren’t binding until a contract has been fully executed.
However, you should be very careful about signing any sort of offer submission form given to you by the listing agent.
If you do sign an offer to purchase form or any other customized offer submission form, you can make yourself vulnerable to a lawsuit if you back out of an accepted offer down the road.
While this is rare, we have seen instances such as McCarthy vs Tobin in Massachusetts where a judge ruled that an accepted offer was binding because both the seller and the buyer signed an offer to purchase form which also contained common contract language.
Furthermore, the buyer had signed a purchase contract and delivered it to the seller’s broker along with an earnest money check. Even though the seller didn’t counter-sign the contract and ended up accepting another bidder’s offer, the judge ruled that the accepted offer was indeed binding.
As a general rule in life, be very careful about signing anything, especially if it contains contract like language. You’re just putting yourself needlessly into a situation where you could be sued. Don’t do it especially if you are bidding on property in a market like NYC where offers are typically emailed, and buyers don’t have to sign anything to begin with.
Disclosure: Hauseit® and its affiliates do not provide tax, legal, financial or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. No representation, guarantee or warranty of any kind is made regarding the completeness or accuracy of information provided.