You’ve saved for a down payment and have started perusing the real estate listings in magazines and on the internet. Before you start attending open houses or calling a real estate broker, you may want to visit your bank for a mortgage pre-approval letter. When you’ve decided that you’re serious and you’re ready to buy a house, you will need to know how much house you can afford.
Getting Pre-Approved for a Mortgage
A mortgage pre-approval can identify your price range, makes you more attractive to sellers because it shows that you have the resources to make the purchase, and can help you act quickly when you find the perfect home. Getting pre-approved for a mortgage involves filling out an application, providing details about your income and finances, and requesting a copy of your credit report. A pre-approval will show as an inquiry on your credit report, and it’s only good for a certain amount of time. When you do find the home of your dreams, your pre-approval may be able to help you negotiate on price and it may count in your favor in a multiple bid situation.
Making an Offer
The next step to buying a house is making an offer. Generally, in Massachusetts an offer to purchase residential real estate is made on a standard form appropriately titled Offer to Purchase which your broker will provide. Attorneys are generally not involved at this stage, but it’s important to note that a signed Offer to Purchase is a legally binding contract for the buyer, and seller when accepted, even if the parties contemplate a more detailed Purchase and Sale Agreement to be signed at a later date. In order to be binding the material terms of an Offer to Purchase must include:
- A description of the property.
- The price to be paid.
- The deposit requirements.
- The location of the property.
- The time and place for closing, even if it is subject to change.
In addition, there have been recent court rulings that both email and text exchanges may form the basis of an enforceable agreement to buy and sell real estate, and findings that multiple writings relating to the subject matter may be read together in order to form a binding contract, so long as the writings, when considered as a whole, contain all the material terms of the contract and are authenticated by the signature of the party to be charged.
Therefore, when negotiating or putting in an offer on a property, you should be cognizant of whether you are committing yourself to purchasing if your conditions are accepted. Nevertheless, should you have a change of heart as a buyer, no court will force you to buy property you no longer want, although generally you may be liable for damages or required to forfeit your deposit as liquidated damages. However, as a seller a court can force you to sell because each piece of property is considered unique. Sellers, therefore, should be particularly careful when negotiating or accepting an offer to purchase.
If you are buying or selling real estate, contact Attorney Allison now for a free consultation by calling 978-740-9433 or filling out our free consultation form. We look forward to talking to you.