Offer and Negotiations
The Buyer Makes an Offer
In New York, offers are made orally through the buyer’s real estate agent. Oral offers are not legally binding. Only written contracts are enforceable for real estate transactions in New York. Therefore, until the contract is signed there is no obligation on the part of the buyer or the seller.
Accordingly, a buyer can place a number of offers on different apartments to try to get the best deal.
In Florida, offers are made in writing and a 10% deposit is required to accompany the offer. Therefore, any offer made by the buyer is legally binding.
Counter Offers and Negotiating
The seller will usually come back with a counter offer. Buyer and seller will go back and forth until they agree on the final purchase price and special terms of the deal. One special term might be a mortgage contingency, which allows the buyer to get out of the contract and receive their deposit back if the bank will not enter into a mortgage for the property. Mortgage contingencies provide for the buyer to obtain the mortgage within 45 days.
The seller might accept a 60-day term, but most sellers would prefer no mortgage contingency at all. With no contingency, the seller may go lower in the price.
Often, sellers will not allow a mortgage contingency for foreign buyers, since it is difficult for the seller know if the buyer was truly turned down by a bank or simply changed their mind about buying the property. This might become an issue for some foreign buyers if the seller won’t allow the contingency. Having a pre-approval letter from the bank often helps the foreign buyer clear this hurdle.
Buyer Will Need an Attorney Once the Offer is Accepted
Upon acceptance, the buyer’s agent will fill out a “deal sheet” that contains the names of the purchasers, as well as all contact information, including the name and address of the buyer’s attorney, therefore the buyer must know which attorney they will be working with at this point.
Within one day, the Condo documents will be sent to the buyer’s attorney to review.
The buyer’s attorney will read the Condo documents and the building’s financial statements, among other documents, to determine the health of the building and any issues that should be addressed. The buyer’s attorney will pose questions to the seller’s attorney and sponsor of the building. The contract will then be revised to address any issues noted in the review, if any.
Until the contract is signed by the buyer, the seller can show the apartment and accept higher offers, if they wish. Therefore, time is of the essence when going through the process.
THE NEXT STEP IS CONTRACT SIGNING.