Ready to Make a Home Offer: Required Details and Documentation
If you’re considering making an offer on a property, there are several key elements you'll need to prepare to ensure your offer stands out and meets all necessary requirements. Here’s a comprehensive checklist to guide you through the process.
Pre-Approval Letter or Proof of Funds:
Pre-Approval Letter: If you’re financing your purchase, you’ll need a pre-approval letter from your lender. This document shows that you’ve been approved for a mortgage loan up to a certain amount.
Proof of Funds: For cash offers, you must provide proof of funds. This could include recent bank statements or investment account summaries that demonstrate you have the necessary cash available.
Offer Price: Decide on the amount you’re willing to offer for the property. This should be based on recent comparable sales and current market conditions.
Earnest Money Deposit: To prepare an Earnest Money Deposit, you will need to provide a payment typically ranging from 1% to 3% of the offer price, which will be held in an escrow account chosen by the seller until the closing date of the property sale, demonstrating your good faith commitment to purchase the home; the escrow company will provide wire transfer instructions for you to submit the deposit within 3 business days of receiving them.
Purchase Agreement: A California Real Estate Purchase Agreement, also known as a Residential Purchase Agreement (RPA), is a legally binding contract that outlines the terms and conditions of a real estate transaction in California. It's a crucial document that's the foundation of a real estate transaction and defines the rights and responsibilities of both the buyer and the seller. Your real estate agent will discuss and have you sign the purchase agreement. Once the seller accepts the buyer's offer, both parties sign the RPA, making it a legal agreement.
Terms included in an offer in California
Purchase price
Property address
Contingencies
Concessions
Target closing date
Contingencies: Include any contingencies in your offer that are important to you, such as home inspections, appraisal, financing, and contingent sale. Understanding the default periods for these contingencies is crucial:
Appraisal and Property Inspection Contingencies: The default period is 17 days.
Loan Contingency Period: The default period is 21 days.
Due Diligence Period: Sellers are required to deliver disclosures within 7 days.
Note that these periods can be adjusted if both parties agree. Contingencies are conditions that must be met for the sale to proceed. If you do not remove a contingency by the end of the specified period, the seller has the right to cancel the transaction.
Counting Contingency Days: Be aware that contingency days are counted as “day after” the contract start date, which is the day following the last signature on the contract. This count includes weekends and holidays.
Concessions: These are requests or offers for additional terms, such as the seller covering some of the closing costs or including certain appliances or repairs.
California real estate is a competitive market, and each concession or contingencies in your offer may put you at a disadvantage against other buyers. Time is of the essence for most sellers, and an offer at or above the asking price with a high down payment is more attractive than an offer filled with contingencies.
Target Closing Date: This is the proposed date when the transaction will be finalized and ownership will transfer.
By following this checklist, you’ll be well-prepared to make a strong and competitive offer. It’s also wise to stay informed about local market conditions to ensure your offer aligns with current trends and expectations. Don’t hesitate to REACH OUT.
Best regards,
Lindsay Woolf | CA DRE #02236711
DOMO Real Estate | CA DRE #01290500
Disclaimer: The information provided in this blog post is for general informational purposes only and does not constitute legal advice. Real estate transactions can be complex and subject to local regulations.
