You have found the home you want to purchase and you are not sure about what is needed to place an offer.
The NC Offer to Purchase and Contract is the form used to make an offer on a property.
Here are the basics:
The Offer Price is the price you are willing to pay for the home and that you put on the NC Offer to Purchase paperwork.
Buyer’s Closing Costs:
Buyer’s Closing Costs are fees associated with the purchase of a home. Talk with mortgage lender to know how much the closing costs will be and ask them to include everything that can apply to closing costs. Examples:
- Inspections: Home, Pest, Septic, Well, Well Water, Survey and any other inspections chosen by buyer
- Closing Attorney Fee
- Discount or Mortgage Points: Fees paid to lender to reduce interest rate.
Closing Costs can be factored into the offer by asking that the seller pay the buyer’s closing costs out of proceeds.. See page 10 (i) of the Offer to Purchase. Note that the amount of closing costs the seller pays is money out of seller proceeds and this should be factored into the amount offered on the home.
Example of adding closing costs into the purchase:
Home price is $100,000 and you need $5,500 in closing costs. In this case a full price offer to the seller would be $105,500 if you are asking them to pay the $5,500 of your fees. This is a great way to keep money in the bank and factor closing costs into the purchase. Note that the $100,000 home would have to appraise for $105,500 for that money to be available for closing costs. If the home only appraised for $103,000 the buyer would need to bring the difference to pay the remaining closing costs.
Please understand that the seller has their own closing costs associated with the sale of the home. The buyer’s closing costs are directly related to the buyer’s side of the transaction.
How much Due Diligence Fee do you want to offer to make your offer stand out from the other offers:
The Due Diligence Fee is paid directly to the seller and applies to your purchase. This money is not refundable to the buyer in most cases. The Due Diligence Fee is important to the seller because if they accept your offer they are allowing you time to do inspections to make sure you want the home. Buyers who back out during the due diligence period have tied up the home for a specific amount of time hindering the sale. During this time the seller has lost possible buyers and also has expenses associated with the home. See page 2 (i) of the Offer to Purchase for more details.
How much Earnest Money Deposit do you want to offer to make your offer appear stronger than the competing offers:
The Earnest Money Deposit is refundable during your Due Diligence Period and it applies to your purchase. Earnest money is not as important to the seller as due diligence money. Earnest money can be refunded to the buyer if the buyer terminates the contract by 5pm on the Due Diligence Date. Most sellers do require earnest money in the negotiations as a sign that the buyer is serious. See page 2 (e) of the Offer to Purchase for more details.
What amount of time is needed for the Due Diligence Period:
This is a negotiable date and it is important that the inspections and appraisal be completed with all reports back well before 5pm on the final day of Due Diligence. It is important to have at least 5-7 days to negotiate repairs with the seller before the end of the Due Diligence Date. See page 2 (h) & (i) of the Offer to Purchase for more details.
When will the Settlement Date/Closing Date happen and when can the buyer move in:
The Settlement Date/Closing Date is a negotiable date and it is important to consult with the buyer’s lender to see what time frame is needed to get through the mortgage loan process. Generally for a mortgage loan 30-45 days is necessary. With a cash purchase closing can happen sooner and that will depend on the buyer’s selection and ordering of inspections, title search by the closing attorney and when the closing attorney can schedule the closing. The seller must be considered on this date as they have to have time to move out if they are still living in the home. Generally a buyer will take possession of the home after the closing attorney records the deed at the courthouse. Sometimes there are cases where the seller asks for more time to move out after closing and that is also negotiable and usually involves the seller renting the house back. Seller possession after closing is not something that happens often. See pages 2 (l), 3 (m) of the Offer to Purchase for more details.
What personal property goes with the house:
The seller may have certain items listed to convey or to be excluded in the MLS listing information. Never assume items such as appliances convey with the home. All personal property that a buyer expects to convey with the home should be listed on page 5 line 3. of the Offer to Purchase. Be aware that mortgage lenders usually do not want to see items other than kitchen appliances and washer/dryer listed as personal property.
These are basic tips you need to consider when making an offer. This does not cover everything in the NC Offer to Purchase. Read the entire document and understand it before signing. Your closing attorney will be happy to answer any questions about legal documents associated with the purchase of your home. The closing attorney is your representative in the transaction to make sure you are informed and know the legal aspects of the transaction. You may choose any real estate closing attorney that is licensed to practice in North Carolina. Please note that the cheapest is not always the best option. Most closing attorneys in our area are competitive in their pricing and the prices generally range $950+ depending on the type of transaction. The Carswell Team has used many closing attorneys in our area and can guide you to several good options.
What do you want to learn about next? Please let us know what interests you.
Meaning of Terms
Offer Price: What a buyer is willing to pay for the property
Contract Price: What a seller agrees to accept by signing the buyers Offer to Purchase.
Due Diligence Fee: This is non-refundable deposit paid directly to the seller. This money does go toward the purchase. Paid by certified bank check (no cash) and must be from the buyer’s account if there is a mortgage loan. Lenders require a paper trail to make sure the money came from the borrower.
Earnest Money Deposit: The earnest money deposit may be refunded to the buyer if the buyer terminates the purchase contract in writing before 5:00 on the “Due Diligence Date”. Paid by check (no cash) and must be from the buyer’s account if there is a mortgage loan. Lenders require a paper trail to make sure the money came from the borrower.
Due Diligence Date: Time for buyer to investigate the property condition. This is a negotiable date on the contract. During the due diligence period the buyer should have the home inspected and appraisal. This is also the time to make sure that the mortgage loan is moving forward and the lender has everything needed for a successful loan closing. The buyer must communicate with their lender to make sure the appraiser goes out in a timely manner and that the appraisal comes back before the due diligence date. Legally the lender does not have to talk to the buyer’s Realtor. The buyer is the client of the lender and there are privacy laws in place to protect the buyer.
Closing or Settlement Date: This is the day that you sign at the closing attorneys office or in front of a notary in the event of a “mail away” closing. The property is not transferred to the buyer until the attorney records the deed at the courthouse. Signing at the attorney’s office is not the official closing. The deed must be recorded and then the keys are available to the buyer. The buyer’s closing attorney represents the buyer and there are privacy laws in place to protect the buyer. Never assume the closing attorney has informed the Realtor of anything. The attorney’s loyalty is to their client.
Can a buyer back out of the NC Offer to Purchase? Buyer please consult your closing attorney as they represent you in the purchase of the property and only an attorney can interpret legal documents.
Can a seller back out of the NC Offer to Purchase? Please consult an attorney that represents you as a seller and one that does not represent the buyer. If you plan to back out of a contract it is very important to have legal representation as a seller.
The Carswell Team consists of the following team members to serve you:
Paul Carswell 828-228-2111 Paul@CarswellTeam.com
Meredith Miller Carswell 828-850-1732 Meredith@CarswellTeam.com
Tina Bayonet 612-219-5400 Tina@CarswellTeam.com
Kimberly Lingerfelt Rogers 828-446-3661 Kimberly@CarswellTeam.com