What goes into an offer?*

*In Chicago/Chicagoland/Cook County, in 2022, I am not a lawyer. And I’m just talking about the optional/fill in parts here, there’s also more that you’re just agreeing to when signing an offer, and we’ll go over all of that together if you’re a client or interviewing me to represent you!

What’s in an offer? Most people think…price? And, maybe they know the words ‘as is’. But there’s a reason it takes a bit to fill out a contract. There’s a lot to it. And therefore a lot of fill-in form spaces we have to put in. But that’s my issue to deal with.

So let’s talk - what’s in an offer? I’m going to go paragraph by paragraph of our favorite contract - The Multi-Board Residential Real Estate Contract 7.0! (There is also one used by Chicago Association of Realtors that’s shorter, but the 7.0 is used all around Chicago and in Chicago so even though it’s longer, I like it as it also includes a lot more up front to make sure we’re covering all our bases.)

1&2 Names & Addresses. All info on you, the seller, and the property. Nothing to negotiate here. Just facts.

3 Fixtures & Personal Property. This is where we say what’s included in the sale. A fixture is anything required for the home to function, and anything attached to the wall (besides artwork). So if you want that playset in the backyard, we make sure to say it here. (Or you negotiate that as a separate item in a personal sale to keep things clean for your loan & the appraisal. Don’t need a lot of extra things gunking up that process)

4 Purchase Price & Payment. Here’s the big one. How much $$$ are you offering? But ALSO, are you (the buyer) asking for any closing credits? How much is earnest money? And when does that get paid out? Also Additional earnest money? I know. We’re already getting complicated. Many agents have a formula they like to use for their contracts that seems to work the most or they’ll get a feeling what will be looked upon well by the seller. E.g. If the seller has been burned in a previous deal, they might like your offer better that has more earnest money versus another offer.

5 Closing. When will be the big transfer? This is another item that your agent can try to figure out from the Seller - what time would be best for the Seller? The best TERMS win, not just most money.

7 Financing. This is where you tell the seller how you’re paying for their property. If you’re getting a mortgage we’ll get the exact numbers from your loan officer to put on the offer. (we’ll also be sending over your pre-approval and your LO’s contact info so they can contact the selling agent). Or if you’re paying cash, you mark it here. If you’re paying cash the seller will likely ask for proof of funds.

8 Disclosures. If you’re working with me, yes you have received all the disclosures.

9 Prorations. This includes tax prorations (because we pay our taxes the year after, so in most markets the seller will give you, the Buyer, the money for the time they' lived in the home because you’ll receive the bill), and HOA fees.

10 Waiver of Professional Inspections. Don’t do this. Please please please please please. Don’t. I will never suggest a client waive inspections. If you want to strengthen your offer, check out the ‘As-Is’ section below. But if you sign this you can’t get an inspection. They do not have to allow an inspector in, and you can’t say anything about it.

Other optional things:

29 Confirmation of Dual Agency. Do you agree that the listing agent can also represent you? I don’t do dual agency, I don’t feel that you can do your proper fiduciary duty as an agent, I don’t like it.

30 Sale of Buyer’s Real Estate. Do you need to sell a property to finance this purchase? This section goes through all this and what stage you’re at. PS in our current mid-2022 market it’s still not great if you have to sell to buy, mainly if you’re in a competitive market (certain areas, turnkey).

31 Cancellation of Prior Real Estate Contract. This is a kind of self-destruct clause if you’re putting in a back-up offer.

32 Home Warranty. If you want to require the seller to purchase you a home warranty. In this economy? (but I do recommend the buyer purchase them!)

33 Well or Sanitary System Inspection. Only if you’re on a well. Gotta love well water. (I grew up on one, it’s fine, but I suggest doing a whole house filtration system if you’re getting one).

34 Wood Destroying Infestation. If you see anything hinky during showing you can request an inspection for termites/carpenter ants.

35 Possession after Closing. This is a whole big thing that deserves it’s own post, but it pretty much means that you, the buyer, will allow the seller to remain in the home after closing for either free (only really in a very competitive market) or for a set sum per day. Your lawyer will tell you not to do this. But it’s still being used because it’s so difficult to purchase if you have that property you still need to sell and if it’s not even under contract, you’re leaving that seller hanging til your property sells, and that’s not really appealing. Again, your lawyer will tell you not to do this.

36 “As Is'“ Condition. This has become wildly popular with the Covid market, but a lot of people don’t know what it really means. If you agree to buy as is, that means you can still do an inspection, and you can back out of the deal because of said inspection, but you cannot ask for anything because of said inspection on the part of the seller - even non-working stuff, and safety stuff! Now does that mean that you aren’t allowed to ask? No… you can throw that ball in their court, and if they think all other offers will also find out that issue and have the same reaction, they may give you a concession for whatever the issue is, but they have 0 obligation to. It’s a really risky game to play. Another item I need to do a full post on.

37 Specified Party Approval. Does a specific person (that is not on the deed) need to give you the go-ahead? Their name goes here.

Now there’s some other things if this is a short-sale, or a 1031 exchange, or a co-op, but this covers your standard condo or single family house purchase!

I hope this helps you understand this huge legal document you’ll be signing! If you have any further questions, please reach out to your real estate attorney. (PS If you’re looking for one & you’re buying in Chicagoland, email me at amandascott@atproperties.com and I can send you my recommendations.)