Many buyers, whether first-timers or veterans, often get confused on terminology when a bid on a house is being submitted. Losing a property you thought you were promised can make for a very frustrating buying experience. This article explains some of the important basics about submitting an attractive offer and reaching a binding acceptance.

After multiple house-hunting showings, you have finally walked into "the" one. You and your real estate agent rush back to the office to complete all the paperwork required to work out a deal with the seller for the purchase of their property. In conjunction with this, your agent may call the seller's agent to let them know of your interest and to find out if the seller is currently negotiating with anyone else. At this time, your agent will request a seller's disclosure notice that describes to the best of the seller's knowledge the overall condition of the property. A review of the comparable sales in that same neighborhood should also be reviewed to make certain the property is fairly priced.

Once all of these preliminary steps have been accomplished, you and your real estate agent discuss the "One to Four Family Residential Contract (Resale)" plus any additional addenda, filling in the appropriate blanks including the price you are willing to buy the property for, loan approval timing, date of closing, etc. After completing the documents, you initial and sign the various documents, including the seller's disclosure notice, and your agent sends it to the seller's agent for presentation to the seller. You have just submitted an "offer". An offer is strictly that, an offer. An offer is not a binding document because at this stage, not all parties to the documents have signed in agreement. An offer is the initial bid expressing what you, at this stage, are willing to do and pay for the property. The seller will now do one of three things. One, the offer will be accepted without revision in which case it will be signed by the seller. Two, it will be rejected without revision. Or three, the seller will decide to negotiate the terms of the contract.

Negotiations are frequently conveyed back and forth verbally. However, writing changes on the offer, initialing those changes, and submitting them back and forth are also sometimes done. Once everyone has come to an agreement, the revised offer must be signed and initialed by both parties in order for the offer to be considered a binding contract. There is no such thing as a binding verbal acceptance. Even if the seller's agent verbally conveys that the seller has agreed to the negotiated offer and will not entertain any other offers, the agent is required by law to submit any other offers received to the seller until an offer has been agreed to in writing.

Due to the favorable market over the past few years, it is reasonably common for a seller to negotiate more than one offer at the same time. As frustrating as this can be for the buyer, this has become a reality for many. The best way to assure that you win the property you want, whether you are aware of other prospective buyers or not, is to assume that another prospective buyer exists and submit your best offer at the very beginning. It is important to remember that a typical mortgage payment will usually only increase about $10 per month for a $1,000 increase in sales price. While this difference works out to only about 30 cents per day for the buyer, a difference of $1000 in sales price for the seller can be substantial.

Although price is generally the biggest factor in the seller's consideration, there are additional ways to make your offer attractive. Presenting a pre-approval (not merely a pre-qualification) letter from your mortgage company with the offer shows that you are not only ready and willing, but also conveys that you are able to purchase the property. You can offer a larger than average amount of earnest money (e.g., $100,000 sales price generally warrants $1,000 earnest money) which will convey your seriousness to the seller. Additionally, the larger the down payment you can afford to make, the more financially solid you will appear to the seller. Finally, the less complicated you make the offer with unnecessary or unusual contingencies, requirements, etc., the more attractive you become as a buyer. In other words, you want to provide security to the seller that by accepting your offer, they can expect a smooth and uncomplicated closing. Good luck!

PLEASE NOTE: This information is not intended to be legal advice. Your licensed real estate agent cannot give you legal advice. If you have any questions about your legal rights or obligations, you should consult with an attorney.