When you have found a home you want to buy, the next step is to make an offer. In Minnesota, that means writing a Purchase Agreement.
Much of the information in the purchase agreement is standard language developed by the Minnesota Association of Realtors, but it also contains information you complete specific to you and the particular property you want to purchase.
Your written offer, along with a letter from your mortgage lender verifying your ability to obtain financing, is submitted to the agent representing the property and presented to the seller.
Upon reviewing your offer the seller will have three options: (1) sign and accept the offer as is, making it a legally binding agreement; (2) counter your offer with proposed changes; (3) reject your offer.
Your offer will include:
- Earnest money – usually about 1-2% of the purchase price, to be held in an escrow account with the listing broker until closing, when the funds will be applied to your purchase
- Price – what you are offering to pay for the property; list price gives an indication of what the seller is willing to accept at that point in time, but is just a starting point; you decide what the property is worth to you based on how much comparable properties have recently sold for, how well the property matches your personal needs and wants, what you can afford, etc
- Closing date – when you want to transfer ownership, often within 3-10 weeks; this is when you will sign your mortgage papers and will need certified funds to complete your purchase
- Financing – how you plan to pay for it: % you plan to put down, what kind of financing, if you are asking the seller to contribute to your closing costs, etc
- Inspection – whether your offer is subject to an inspection and when it will be completed, usually within 3-5 days of coming to an agreement
- Contingency – whether your offer is subject to the sale of another property; if it is, your property must be already listed for sale or be ready to list soon
- Possession – although possession is often immediately after closing, other arrangements may also be made, such as possession the following day if the seller must close on the property you are buying before closing on a new home
- Personal Property – includes items such as appliances, window treatments, etc
- Miscellaneous – includes items such as home warranty, responsibility for city inspection requirements if not already completed, etc
- Arbitration – in the state of Minnesota you have the option of deciding at the time of purchase agreement to resolve any future disputes through arbitration…click here for more information
Our Minnesota purchase agreements state time is of the essence, and when dealing directly with a property owner that usually means a response within 24 hours. Response to offers on properties being sold with bank involvement can vary greatly depending on the situation. I have been involved in some offers with a response in a matter of hours…others where it takes months!
