There are several items that need to be decided on before you make a formal offer:
Price of home: how much are you willing to pay for the home?
Closing/Settlement Date: This is the date your deed will be recorded and you will officially own the property. NOTE: doing a same day closing when buy AND selling a home can make the entire process more complicated. Keys are not given to a buyer until the deed is recorded with the county Register of Deeds. Please talk with your agent to solidify a realistic settlement date.
Due Diligence period: this time frame (usually 14-21 days after contract date) is used to perform any inspections, surveys, appraisals, etc. (see Due Diligence info sheet in your resource binder). This time period and the due diligence fee are completely negotiable.
Due Diligence money/Earnest money: these fees are typically paid as part of a contract negotiation/agreement. Both forms of payment are negotiable (you do not have to offer any due diligence fee or earnest money but most sellers won’t consider offers without these fees) and can be very important to your real estate transaction. Usually the due diligence amount + earnest money amount = about 1% of the sales price of the home.
Due Diligence amount: this is money given to the seller to compensate them for taking their house off the market while you conduct your inspections on the property. The check is written directly to the seller and will not likely be returned to you if you terminate the contract for any reason. This money will used toward the purchase price of the property.
Earnest money amount: this is a “good faith” gesture that indicates your willingness to fully complete the transaction to purchase the home. Earnest money is typically held by the buyer’s attorney or the listing firm. This money will be held until closing or until the contract is terminated (situation dependent) and ultimately used toward the purchase price of the property.
Personal Property: some transactions involve the transfer of personal property such as: refrigerators, washers and dryers, playsets, etc. These items must be identified in the contract.
REAL ESTATE CONTRACTS ARE NOT VALID UNTIL THEY ARE IN WRITING AND SIGNED BY ALL PARTIES.