How You Actually Buy A House
When you find a home which you want to buy and have your mortgage pre-approved it's time to approach the seller. Your agent will help you initiate the process and assist you with negotiations.
Offer To Buy A House
You have to submit to the seller an Offer to Purchase. Your agent should discuss with you all details, and prepare the offer in writing. The seller may accept or reject it, or respond with a counter-offer.
You can also choose one of these options if your offer comes back to you with changes proposed by the seller. Revisions can be made as long as both parties agree to them.
Conditional Offer depends on whether some of your conditions will be met. If any condition isn't satisfied you can get out of the transaction with no consequences.
For instance, you can make your offer contingent on a financing, lawyer's review, home inspection, or survey. Conditions decrease the risk of making a bad purchase. On the other hand, the seller may reject your offer if they are unreasonable and excessive.
Deadlines to remove conditions must be accepted by both sides. The standard is ten working days for a typical prerequisite. Sellers are reluctant to accept longer time limits because properties are taken off the market once a contract is signed.
Firm Offer means that the buyer is ready to purchase the property without any conditions. Firm offers are preferred by sellers since they enable a fast sale.
Making Your Offer
Agreement Of Purchase
Once you and the seller approve all terms and conditions, and sign the document you have entered into a legally biding Agreement of Purchase and Sale. At this point you'll have to make a deposit between $500 - $1000, held in the agent's brokerage trust account.
When some specific condition is fulfilled both sides will sign an amendment, a legal note attached to the agreement to remove that condition. Amendments can also be used to change transaction terms if you for instance renegotiate a new price or closing date.
When all conditions are removed you have to increase your deposit to 5% of the purchase price. It'll be transferred to your lawyer's trust account for the transaction closing as a part of your down payment.
If you put more than 5% down you'll have to pay the rest of your down payment to your lawyer on the closing day.
Breach Of Contract
Purchasing agreements shouldn't be taken lightly. It may be difficult and costly to withdraw from a legally enforceble contract.
Most likely you'll lose the money deposited for the purchase.
If you refuse to complete the transaction the seller can sue you. Damages may be awarded to compensate the seller for losses caused by your failure to fulfill the contract.
Respectively, you can seek legal sanctions for your own losses, if your seller walks out of a sealed deal.