Every contractual agreement has two basic components, offer and acceptance. One party, the offeror, makes an offer which is either accepted or declined by the other party, the offeree. In case the offeree accepts the offer, it becomes a binding contract. An offer has six key components, called the elements of the offer. These include
- Inclusions and exclusions
- Closing or Possession date
Depending upon the conditions in the local market and the information provided by your real estate agent, you offer a price to the seller, showing your intentions to buy his/her home. The price offered by you may or may not be different from the home owner’s listed price. If the price offered by you is less than the seller’s listed price, it may take some negotiation to come up with a price that both the parties are happy with.
Deposit is the money given by the buyer in advance to show his/her intention to complete the purchase of a property. Your deposit is taken as an act of good faith and is included in the total price of the home when the deal closes. Usually a percentage of the total price is transferred to the seller’s account as deposit, but your real estate agent can better guide you about the appropriate deposit amount.
Terms of an offer include the total price offered by you as well as other financial details. You always have an option to arrange your own finances or ask to assume the seller’s mortgage. Assuming the seller’s mortgage is only recommended if you are short on finances or the mortgage comes with a lower interest rate.
A condition is a term or requirement mentioned in the purchase agreement by the offeror, which must be fulfilled to complete the deal. The common conditions stated in purchase contracts of homes include “subject to home inspection”, “subject to you obtaining financing”, or “subject to you selling your property”.
Inclusions and Exclusions
This section of the offer includes a list of the items and fixtures that will be included as a part of the home during the transfer of the property. These include electrical and heating appliances, furniture, decorative items etc. All those items that you do not want to be included in the sale of your home, need to be listed in exclusions.
Closing or Possession Date
It is the date when the title of the house is legally transferred to the buyer’s name and the transfer of funds is completed.