By Elliott Topkins, Esquire
8/11/11
Too often, I have been involved with offers on residential real estate transactions, which really do not serve their intended purpose. Especially for sellers, offers are critical documents, and there have been cases decided by the highest court in Massachusetts which have established the fact that offers are contracts, and a buyer does have the power to compel a sale based on the terms of the offer, even if the parties never reach the normal next stage of the process, which is the execution of the purchase and sale agreement, a more extensive document which “fleshes out” more details than those contained in the offer.

Since the offer is important to both sides, I thought I would go over what I consider essential elements of the offer, and my thoughts on the best way to develop an offer which does what it is supposed to do, which is to provide a road map to counsel in terms of drafting the purchase and sale agreement.

• Make sure that all terms of the offer are legible. I cannot tell you how many times I have received an offer which has been faxed and re-faxed and re-faxed again, and is not legible. I am always thankful when I receive an offer which is typed rather than written in long hand, or script. Taking the extra time really does assist the expeditious completion of the process.

• Make sure the offer includes all of the terms of the transaction which have been agreed upon. If there is personal property which is included, the items which are included (and excluded, as the case may be) should be detailed. I like offers which specifically reference the MLS listing sheet, if one exists. You would be surprised as to how many transactions are delayed, or even scuttled, because there is incomplete information in the offer.

• Be realistic in the important dates in the offer. Most offers have financing contingencies. This is a provision which is placed in the offer (and then replicated in the purchase and sale agreement) which says that the buyer’s obligations are subject to the buyer getting a mortgage. These days it takes at least 30 days, and sometimes as much as 45 days, to obtain a mortgage commitment. The fact that the buyer is pre-approved only speaks of the buyer’s financial suitability. The critical element for lenders these days is the appraisal, and that process is taking longer and longer. Since it is taking longer to get a mortgage commitment, the closing date will be delayed as well. A good offer takes into account the realities of the mortgage environment we are living in.

In summation, there is much to be gained by taking time and effort to produce an accurate and realistic offer. It has been my experience that a well-drafted offer is critical to an efficient and mutually satisfactory purchase transaction.