OFFER TO PURCHASE:

Definition - A document that outlines the main terms (price, dates/deadlines, deposit amount, etc.) for the purchase between a Buyer and Seller. It is considered to be a "legally binding" agreement once executed by both parties.

Common Misconception - An offer is hand-delivered to Listing Agent by the Buyer's Agent with a deposit check.

The Real Deal - Offers are usually submitted via email directly to the Listing Agent by the Buyer's Agent. Sellers can accept, reject or make a counter-offer. When both parties reach an agreement on the terms and the offer is executed by the Seller, it is emailed directly to the Buyer's Agent by the Listing Agent. Once it is executed by the Buyer and Seller, it becomes a legally binding contract. 

DEPOSITS:

Definition - The deposit is also known as "earnest money" and it is usually held in escrow by the listing brokerage (Miranda Real Estate Group, Inc. in this case) when received. 

Common Misconception - Checks are hand delivered from the Buyer's Agent to the Listing Agent along with the Contract for Purchase.

The Real Deal - It is customary for the Buyer's Agent or the Buyer to drop off or mail the deposit to the listing brokerage once the Contract for Purchae is executed by both parties. If a Buyer defaults and there is any dispute over the deposit, a mutually agreeable Cancellation and Release must be executed by all parties before any funds can be returned to the Buyer or given to the Seller.

MORTGAGE PRE-APPROVAL:

Definition - A Pre-Approval is a preliminary approval to obtain a mortgage. Buyers who plan to obtain a mortgage should provide this along with their offer.

Common Misconception - Buyers are completely approved for their mortgage once they have a pre-approval and nothing can go wrong.

The Real Deal - PRE is the key part of pre-approval to pay attention to. A Buyer cannot apply for full approval until they find a home and have an executed Contract for Purchase.  If Buyers provide a pre-approval from a reputable mortgage broker and company, chances are they will be able to actually obtain the mortgage, as long as they don't have a life change such as job loss, credit change, etc.

HOME INSPECTION CONTINGENCY:

Definition - This is the period of time that Buyers have to inspect the home and conduct their due diligence. The deadlines for inspections and types of inspections to be conducted are included in the Offer to Purchase.

Common Misconception - Buyers cannot attempt to renegotiate or back out of the purchase following or as a result of an inspection.

The Real Deal - After their inspections Buyers have the right to proceed with the sale, renegotiate purchase terms, or back out of the sale. If parties are unable to come to an agreement, Buyers are entitled to the return of their deposit. Buyers sometimes use the inspection contingency as a means to renegotiate their offer terms. If this occurs, I will advise you accordingly depending on the circumstances.

APPRAISAL:

Definition - An appraisal is an evaluation of a home's value conducted by a licensed Appraiser who is hired by the Buyer's mortgage company. The purpose of an appraisal is to allow the lender to ensure that the home's value is enough to warrant a mortgage in the amount that the buyer is seeking.

Common Misconception - Buyers use this to get a lower price or that the appraisal is another inspection. 

The Real Deal - Buyers have no control over the amount of the appraisal and it is not another inspection. Most of the time appraised values reflect the amount the buyer is willing to pay for the home. Appraisals sometimes come in too low; this is more apt to happen when there is a lack of comparable sales in the area. If the appraisal does happen to come in too low we will advise accordingly depending on circumstances. 

MORTGAGE CONTINGENCY DATE:

Definition - A provision in the Contract for Purchase which specifies the date and time by which the buyers must have their mortgage commitment.

Common Misconception - If the Buyers do not get their mortgage by this date the Seller can keep the Buyers' deposit.

The Real Deal - If Buyers notify the Seller prior to the contingency date that they need additional time to obtain their mortgage or that they were unable to obtain a mortgage, they can terminate the sale and get their deposit back. However, if the Buyers are denied a mortgage after this date the Seller may be entitled to keep the deposit. Please keep in mind that the this will be an attorney matter.

CLOSING DATE:

Definition - The date on which the deed is executed and transferred to the Buyers, and Buyers officially take ownership.

Common Misconception - The Seller can remain in the home after this date, or the Seller can easily change this date after signing a contract.

The Real Deal - This is a target date in the Contract for Purchase, the actual closing date will be determined by the commitment from the bank, clear title and other factors combined.  Sometimes mortgage delays from the Buyer or title delays from the Seller can cause a closing to be delayed. One other important factor to keep in mind is the house must be cleaned of all personal possessions and delivered in broom-clean condition.

 

OFFER TO PURCHASE:

Definition - A document that outlines the main terms (price, dates/deadlines, deposit amount, etc.) for the purchase between a buyer and seller. It is considered to be a "legally binding" agreement once executed by both parties.

Common Misconception - Offer is hand-delivered to listing agent by the buyer's agent with a deposit check.

The Real Deal - Offers are usually submitted via email directly to the listing agent by the buyer's agent. Sellers can accept, reject or make a counter-offer. When both parties reach an agreement on the terms and the offer is executed by the seller, it is emailed directly to the buyer's agent by the listing agent. Once it is executed by the buyer and seller, it becomes a legally binding contract. Practically speaking the offer is more legally binding to the seller than the buyer if there are contingencies such as a home inspection as outlined below.

DEPOSITS:

Definition - The deposit is also known as "earnest money" and it is usually held in escrow by the listing brokerage (Miranda Real Estate Group, Inc. in this case) when received. 

Common Misconception - Checks are hand delivered from the buyer's agent to the listing agent along with the Offer and Purchase and Sale agreement.

The Real Deal - It is customary for the buyer to send the deposit electronically or for the buyer's agent to mail the deposit to the listing brokerage once the Offer and Purchase & Sale agreements are executed by both parties. As explained in our Escrow Policy, if a buyer defaults and there is any dispute over the deposit, a mutually agreeable release must be executed by all parties before any funds can be returned to the buyer or given to the seller.

MORTGAGE PRE-APPROVAL:

Definition - A Pre-Approval is a preliminary approval to obtain a mortgage. Buyers who plan to obtain a mortgage should provide this along with their offer.

Common Misconception - Buyers are completely approved for their mortgage once they have a pre-approval and nothing can go wrong.

The Real Deal - PRE is the key part of pre-approval to pay attention to. A buyer cannot apply for full approval until they find a home. If buyers provide a pre-approval from a reputable mortgage broker and company, chances are they will be able to actually obtain the mortgage, as long as they don't have a life change such as job loss, credit change, etc.

HOME INSPECTION CONTINGENCY:

Definition - This is the period of time that buyers have to inspect the home and conduct their due diligence. The deadlines for inspections and types of inspections to be conducted are included in the Offer to Purchase.

Common Misconception - Buyers cannot attempt to renegotiate or back out of the purchase following or as a result of an inspection.

The Real Deal - After their inspections buyers have the right to proceed with the sale, renegotiate purchase terms, or back out of the sale. If parties are unable to come to an agreement, buyers are entitled to the return of their deposit. Buyers sometimes use the inspection contingency as a means to renegotiate their offer terms. If this occurs, I will advise you accordingly depending on the circumstances.

APPRAISAL:

Definition - An appraisal is an evaluation of a home's value conducted by a licensed appraiser who is hired by the buyer's mortgage company. The purpose of an appraisal is to allow the lender to ensure that the home's value is enough to warrant a mortgage in the amount that the buyer is seeking.

Common Misconception - Buyers use this to get a lower price or that is is another inspection. 

The Real Deal - Buyers have no control over the amount of the appraisal and it is not another inspection. Most of the time appraised values reflect the amount the buyer is willing to pay for the home. Appraisals sometimes come in too low; this is more apt to happen when there is a lack of comparable sales in the area. If the appraisal does happen to come in too low we will advise accordingly depending on circumstances. 

MORTGAGE CONTINGENCY DATE:

Definition - A provision in the offer and Purchase and Sales Agreement which specifies the date and time by which the buyers must have their mortgage commitment.

Common Misconception - If the buyers do not get their mortgage by this date the seller can keep the buyers' deposit.

The Real Deal - If buyers notify the seller prior to the contingency date that they need additional time to obtain their mortgage or that they were unable to obtain a mortgage, they can terminate the sale and get their deposit back. However, if the buyers are denied a mortgage after this date the seller is usually entitled to keep the deposit. Please keep in mind that the Escrow policy with regard to the deposit would apply under these circumstances.

CLOSING DATE:

Definition - The date on which the deed is executed and transferred to the buyers, and buyers officially take ownership.

Common Misconception - Seller can remain in the home after this date, or seller can easily change this date after signing a contract.

The Real Deal - This is a firm date in the Purchase and Sales Agreement that cannot easily be changed. Sometimes mortgage delays from the buyer or title delays from the seller can cause a closing to be delayed. One other important factor to keep in mind is the house must be 100% cleaned out by this date.