An offer to purchase is a legally binding document, not just a casual negotiating tool. The moment the seller of the real estate signs your offer, you are obligated to live up to its exact language. Since you can write the offer how you want to, why not include the clauses that smart buyers use to protect themselves? You can also use language that will save you money.
The Offer To Purchase – Important Clauses
Inspection contingency clauses. You want something like this in every offer to purchase: “Offer is contingent upon a home inspection and buyer’s approval of the results; inspection to be done at buyer’s expense within ten days.” You can ask the real estate agent for help with the specific wording. This clause gives you the right to have an inspection done. If anything negative is found, you could refuse to “approve” of the results, and so get your deposit back. Alternately, you could renegotiate a lower price.
Earnest money clause. Real estate agents will tell you that a certain amount is necessary for a deposit, but the decision is yours. A small earnest money deposit may be taken seriously, if you include a clause like this: “$100 earnest money deposit, to be increased to $2,000 upon acceptance of this offer.” Or you can have it increased “when all contingencies are met.” The reason? Suppose there’s an argument about you backing out because the inspector found foundation damage. You won’t have your money tied up while this is being resolved.
Right to assign clause. This one is primarily for investors. Suppose your partner isn’t there to sign the offer, or you want to “flip” the deal to another investor, or you may need to involve a partner for purposes of funding the deal. You need a clause in the offer to purchase that covers this. Including the words “and/or assigns” after your name on the offer is usually sufficient, but ask the real estate agent what the local custom or language is. This allows you to add another buyer or assign the whole contract to another.