The Purchase "Offer"

When buying a house it is important to know and understand the difference between making an Offer and signing a Contract to Purchase.

In almost 100% of home sales, the buyer does not make an offer of purchase; they sign a binding agreement stating that they will purchase the home. A contract has legal remedies; offers do not. There is a huge difference.

Let’s say you find a house while riding around with a real estate broker/agent. You view the house, and it appears to be what you’re looking for. You then say to the agent, “I would like to make an offer on this house.”

The agent fills out a document and tells you, “This is your offer on the house we looked at today.” The document is reviewed and numbers are discussed, etc. The agent then requests your signature before the document is presented to the seller. You sign and give up earnest money. After all, it goes on across America everyday.

Here is what really happened

• You instructed the agent to make an offer.
• The agent did not prepare an offer; he/she prepared a binding contract that you signed which forces you to purchase the house.
• You were told to give earnest money to show your sincerity, which may be as little as $500 or more than $750,000.

Earnest money has nothing to do with sincerity when buying a home. Earnest money benefits the real estate company that you assigned holder of your money. It is deposited into a holder’s interest bearing account, and the holder keeps the interest. Sellers never see, keep, or use your earnest money or the interest accrued by it. The agent should have told you that Georgia does not require homebuyers to give earnest money when purchasing residential property.

Lesson #1: You locked yourself into a contract to purchase a home when you thought you were only making an offer. Next time be sure you are making an offer only.

Lesson #2: You gave valuable earnest money that may never be returned should you not buy the house. Never give more earnest money than you want to lose.

Jeff Pope Home Inspections, Inc.® - Copyright 2009 - All rights reserved.
Nothing on this website is to be taken as legal advice, contact your attorney for legal representation.