How to Make an Offer on Your First Home: Negotiate a Contract that Works for You!

Huzzah! You've done it! You have found your dream home and are ready to make an offer. Although there are several important pieces to completing this process successfully, no one way is "the right way". Purchase contracts differ throughout the nation and vary in length and terms. Negotiating is a give and take event that begins with the initial offer. A good offer is the first stepping-stone to a successful deal.

Your initial offer is expected to be lower than the asking price. A good offer contains several key points.

· Your offer must make sense and be realistic. If you had a dream last night that you got the house for $30,000 that's not a good enough reason to use that as your initial offer. It must be based on comparable homes in the area selling within the last six months. Make your comparisons based on homes of the same size, condition and location. It isn't accurate to compare a home that sold in the same neighborhood but was two bedrooms shy or thirty years older.

· Make sure your loan and financing terms are realistic and up to date. An offer can easily be turned down because the buyers mortgage interest rate, origination fees and more were not based on current lending conditions. Make sure that you have allowed for a reasonable amount of time to obtain financing.

· A good idea in any offer is to include clauses to allow for continued negotiation in the event of problems. Something is bound to come up. If not, you'll be the only person in the world who had a absolutely flawless home buying experience. Neither you nor the seller will be aware of any property defects. Use a property inspection clause so that price negotiations can reopen in the event of corrective work.

The seller can then agree to the price and terms you've offered and sign the agreement. You then have what is called a ratified offer. The sale is pending on your new home. Congratulations! Your own your way to home ownership!

The Offer Contract

Its been one exciting turn after another. You've found the perfect house just when you thought you never would. You made an offer and it was accepted. Now it's time for the offer contract or purchase contract. The purchase contract is put in place to help the buyer and seller through a tough situation. The seller doesn't want to hand over the title until he gets the cash but the buyer doesn't want to hand over the cash until he gets the title. So the contract sets out all the responsibilities and commitments that must be made in order for both to happen. There are a few die-hard rules that must be followed in order to get what you really need out of your contract.

Get it in writing
Always, always put everything in writing. Never make an oral offer or contract. It just makes good sense. A good well-written contract will adequately protect both parties.

Make sure it's all there
When the contract is signed by both parties (or ratified) you can be held to whatever is on it. This also works the other way. If you leave something out of the contract that you have agreed on- tough titty. You wont get it.
The date, amount of deposit and names of both parties in the capacity of buyer or seller as well as the full purchase price and complete legal description and address of the property should all be included.

Who gets what?
Every broker, agent etc that gets compensated should be named in the contract as well as the amount.

There are several contingencies that may or may not be included in the contract. These could include things like earnest money or a deposit that was put down. Make clear any conditions that may be present to get your deposit returned if need be. The contract should also be contingent upon you finding satisfactory financing.

No doubt about it, contracts are long, complicated documents. Patience, perseverance and tenacity will carry you one step closer to your dream of homeownership!