Updated: Jan 13, 2020
After looking at a lot of homes (or maybe just a few), you have found the home that you want to make an offer on! Congratulations! In today's real estate market, in many areas of Richmond, you can't wait a long time to make that offer! If you have never written an offer on a home before (for instance, you are a first time home buyer) or it has been many years since you purchased your home, you should probably sit down with your Buyer Agent and write up your offer! Why?
In the Richmond area, our offers are made on a Purchase Agreement, which is 9 pages long!!! That is a lot of things to understand! So I think that sitting down with your Buyer Agent allows you the chance to go over the paperwork so you understand just what it is you are signing (remember - this is a legal document) and your Buyer Agent can answer any questions you have! Remember, this is a great time to ask those questions!
So what all is included in the Purchase Agreement?
What are the basics? Buyer and seller names, property address, property legal description, what is staying with the house, the addenda that are made part of the contract, the closing date, your settlement agent (in Virginia you can choose to have either an attorney or title company do your side of the closing), acceptance deadline (how long you want to give the seller to respond to your offer).
The Offer Price!
This is the price that you are offering to the seller! You and your Buyer Agent should have a conversation about what is the best price to offer to the seller for their house! You and your Buyer Agent will likely look at a lot of things when deciding how to structure your offer - how is the house priced to begin with, how long has it been on the market, are there multiple offers, how does the house compares to others on the market or have sold in the neighborhood, do you need closing costs, what type of loan you are getting, what appliances, if any, do you need!
Your offer will have certain contingencies built into it -
· Financing - it is contingent upon you getting loan commitment (not just pre approval) from your lender!
· Appraisal - it is contingent upon the house appraising for purchase price (if you decide you want to put in that contingency - not everyone does, but I certainly always recommend it)
· Property Owners/Condominium Association - if the house or condo is in a neighborhood that has an HOA, then you have a right to a review period to decide if you still want to live in the neighborhood
· Property Inspections - you have a right to do an inspection of the home (I will talk more about this later on)
· Title - it is contingent upon getting a clean & marketable title to the property
You will most likely want to do any and all inspections on the property. Virginia is a buyer beware state, so you will need to do any and all of your own due diligence! This due diligence should include inspections on the house. Even if you are purchasing the house as is and seller is not going to do any repairs, you still need to be able to terminate the contract if the needed repairs are more than you expect. So what inspections do buyers generally do?
· Whole House - an inspector will go through the entire house top to bottom and let you know about any defects they see in the house!
· Roof - if the roof is old or you have concerns about it, some buyers choose to get a separate roofing inspection done!
· Radon - radon is an odorless, colorless gas that can contribute to lung cancer, so I am seeing more and more buyers choosing to get a radon inspection done. Most of these buyers get a radon inspection done in the house, but if the property is on a well, I have seen many of these buyers test the well water for radon!
· Fireplace - many sellers in the Richmond area are now selling the fireplace, flues & chimney in as is condition with seller doing no repairs, however, many buyers want to make sure that the fireplace is in good working order so they are still having it inspected at the time of inspections!
· HVAC - if the system is old, or there are repairs that may be needed based on the home inspection, some buyers are choosing to do a separate HVAC inspection on the unit!
· Well - if the property is on a well, the contract states that the well water needs to be tested by a certified lab showing that it is free of contamination by coliform bacteria and this test needs to be provided by the seller. However, if the property is being sold as is, then this test falls to the buyers to do!
· Septic - if the property is on a septic system, the contract states that the septic system is properly working! Normally this inspection is provided by the seller, but if the sale is as is then this must be done by the buyer! There are a few different types of inspections here - a visual inspection which is nothing more than looking at the ground (I don't normally recommend this one), or you can choose to have a more in-depth inspection in which the distribution box is opened & inspected and the system is pumped (this is my recommendation).
· Termite - termites are an issue here in Richmond, so it is important to have a termite inspection done on the house! Normally this inspection is provided by the sellers, but if it is an as is sale, then the buyer will need to have this done during the inspection time.
Since Virginia is a buyer beware state, the seller really doesn't do much disclosing! But there are some disclosure that the seller needs to disclose and some things they don't disclose. For a list of what the sellers obligations are under the Virginia Residential Property Disclosure Act and under law, please go to the DPOR website here, However, the seller is required to disclose if they have actual knowledge of any lead paint hazards in the house (if it was built prior to 1978), if there is any defective drywall in the house, if the house has had a meth lab that has not been properly cleaned up, and if there is a waiver issued by the health department on their septic system, if applicable!
As you can see, there are a lot of parts to your offer. This is why I will generally recommend that at the time you wish to write up an offer, you and your Buyer Agent sit down and go over the entire contract and paperwork so that you fully understand what you are signing!
Feel free to let me know if you have any questions. You can always contact me at 804-869-1191.