I remember when I was a new investor and I was stuck on moving forward because I didn’t have the correct form. Without that form I could not write that offer. I see this in many a new investor. I hear them say “If I just had that form, I could do the deal!”
Sorry, guys – don’t let the form be your excuse because you can obtain a form for the most basic real estate strategies by going to Google, Your Local Title Company or hey, here’s a shocker, the MAREI Online Library.
Let’s take a look at how to write an offer to purchase.
First you locate a deal, if it is a deal on MLS, your problems are answered as the Realtors have a 40+ page document that they will fill out for you and all you have to do is sign it.
After you have located a deal, work your numbers and figure out how much you want to offer, this is the purchase price.
Next, you may have to determine how much earnest money you are going to put down, on MLS that is typically going to be $500 t0 $1000. I have offered as much as the full purchase price as the earnest money, which if you know you have an awesome deal and have all the right inspection clauses in the contract is a great way to get the seller to take your offer over others. I typically have no earnest money as I buy from motivated sellers and don’t put it anywhere in the contract, but I pay cash. If you are using a lender to fund your transaction they may require earnest money and if the seller has an attorney look over your contract, well then they will probably want you to put down $2000.
The next thing I usually look at is when are we going to close. We usually want about a week to 10 days, but it all depends on the transaction. I want to get my deals in my name fast so I can start marketing them again or start rehab quickly. Others of you might want 30 to 45 days to give you time to get financing or find another buyer. Other times the seller will have a date, on one house recently we put closing out about 4 months because the seller wanted to sell, but not move till the end of the year.
Ok, you need to put this in your offers and that is inspection period. How many days do you need to have your inspector come in and take a look at the house. When I am making offers on MLS I always put in 10 days, and if you are new to this you need to actually have an inspection. We inspect our own houses in most cases and we use the inspection period as a negotiation point that we can eliminate to make our offer better instead of offering more money. When we have a major issue we are unsure of, we specifically write that in, for example buyer’s offer is contingent upon a satisfactory inspection of the foundation by a structural engineer with in the next 10 days.
Ok, so you now know the seller’s name, the buyer’s name and the address of the property – I hope. You know how much you are going to offer, how you are going to pay for the property, how many days you need for inspection and when you want to close.
Write that all down on a piece of paper, sign and date it. Present it to the seller. If they agree, have them sign and date it. Now you have a contract. It can be written on a legal pad or a napkin, but if all parties agree in writing, you have a contract you can take to the title company.
However, if you want something in a legal looking form, remember Google can produce 1000’s of real estate purchase agreements, you can buy a basic document from legal document companies and the local office supply store, or you can check out the MAREI Online Library.
Now if you want to get a bit creative, you might need to take some time to learn about the creative strategy and the form that goes with it. But I can tell you with the all the courses I have sitting in my office almost all have the same basic simple forms and documents.