Buyer Guide
Buying property involves a seemingly endless number of details. This guide is designed to make the process easier to navigate and understand.5. MAKING & NEGOTIATING THE OFFER
READY TO MAKE AN OFFER?
Here is what we will submit:
- Property Transfer Notification Certification (“Lead Paint Form”) for houses built before 1978
- Purchase and Sale Agreement
- Buyer and Seller Notice of Dual Agency if needed
- First Deposit Check
- Land Rider if needed
- Condominium Rider if needed
LEAD PAINT DISCLOSURE
Massachusetts and federal law requires all parties (sellers, real estate agents, buyers) to comply with federal and Massachusetts lead-based paint disclosure requirements for homes built before 1978. They must fill out and sign the Property Transfer Lead Paint Notification before signing a P&S agreement. Here is a link to the form >>
THE PURCHASE AND SALE AGREEMENT
A legal contract consists of a written offer and a signed acceptance of that offer. (Verbal offers aren’t worth the paper they’re not written on.) In Berkshire County real estate transactions, the Standard Berkshire County Multiple Listing Service Purchase and Sale Agreement—aka the P&S—is what we use.
This section highlights the key components we focus on when writing an offer. Once you’re under contract, you’ll refer to the Buyer P & S Timeline.
1&2. PARTIES & DESCRIPTION. Of course the document begins by naming the parties involved, and describing the location, using deed and/or assessor map references.
3&4. PURCHASE PRICE & CLOSING DATE. This is crux of it: what you want to pay and when you want the keys.
- Price you wish to pay
- Amount of your earnest money deposit (typically 1% of purchase price, or a round number like $1000 or $5000)
- Amount of second deposit, to be submitted after the inspection contingency (typically, this amount brings your total deposit up to 5 or 10 percent of the purchase price)
- Balance to be paid at closing.
The listing broker holds the deposits in an escrow account.
5. CONTINGENCIES. The contract contains four contingencies to protect buyers. If despite diligent efforts, you…
1. don’t get the loan you’ve applied for
2. aren’t able to obtain a satisfactory insurance binder or
3. your home inspection is unsatisfactory
…you may cancel the agreement.
4. If the seller submits a failed Title 5 report, you may cancel the agreement.
10. INSPECTION. The purpose of the inspection is both for you to familiarize yourself with how the property functions and to scrutinize it for any safety, mechanical or structural defects. Inspections typically take 2-4 hours, depending on the inspector and the property. After reviewing the report, you will determine whether…
- The inspection was satisfactory, and you wish to move forward.
- The inspection was unsatisfactory, and you wish to cancel the agreement.
- The inspection was unsatisfactory, but you still want to purchase the property if you can negotiate an agreement with the sellers to resolve the issues. You will either ask them to address any safety, mechanical, or structural issues, or you will ask for a monetary concession to address those issues yourself, which allows you to be in control of the repairs. Heads up: You will need to distinguish between “improvements” you wish to make, and safety, mechanical or structural defects. These defects should be dangerous or costly enough to warrant a request.
Occasionally an extension is warranted if professional estimates need to be obtained as part of this negotiation process.
Assuming an agreement is reached, all parties will sign a revised P&S. If there has been an extension, the second deposit is typically delayed until agreement is reached.
13. FIXTURES. This paragraph states that whatever is physically attached (i.e. nailed or screwed in) or used in connection with the house is included in the sale. (The listing agent should specify if sellers have excluded any fixtures. Double check what appliances are conveying.) Often we reiterate the full list of appliances here.
30. BUYER’S DEFAULT. This is one of the few protections for the seller in this contract. If you fail to fulfill your obligations under the contract, you sacrifice the amount specified in paragraph 30. Standard practice for Buyer’s Default in this area is 5 percent of the purchase price.
35. SPECIAL CONDITIONS/ADDENDA. This section is used to add conditions that weren’t specified in the rest of the P&S. It is standard practice to insert an attorney review here—usually three or five business days. This is handy for when you’re writing a contract over the weekend. You won’t risk waiting to submit the offer, confident that your attorney can review it on Monday or Tuesday.
36. TERMINATION OF OFFER. Generally, we give sellers 2 days to respond to your offer.
RIDERS. Sometimes, when submitting a contract to purchase a piece of land or a condo, we will attach a Rider, detailing additional terms.
Of course, as with any legal document, we recommend you have your attorney review it.
NEGOTIATING
We will submit the necessary documents along with your deposit check to the listing agent. If the seller signs, great news—you are under contract! Otherwise, whether they make a counter offer or they choose not to respond at all, we will discuss strategy, and formulate a counter offer. As you move through the negotiation, we will advise you, and advocate for you. If/when an agreement is reached, the P&S will be revised, and signed by all parties.
Multiple Offers: There are many potential scenarios in multiple offer situations. The seller may simply sign one right away, but more often they will make a decision only after asking all parties to submit their “best and final” offers for review.
Heads up Regarding Purchasing Personal Property: The P&S contract pertains to the sale of real estate, not personal property, such as furnishings, lawn mowers, etc. Particularly if you are getting financing, personal property must not be mentioned in the P&S contract. If you are purchasing furnishings or other personal property from a seller, we will draft a separate agreement.
Once you’ve submitted an offer, please use the next section, Buyer P & S Timeline, as your guide.
Guides written by Barney Stein,
LVRE agent since 2007
5. MAKING & NEGOTIATING THE OFFER
READY TO MAKE AN OFFER?
Here is what we will submit:
- Property Transfer Notification Certification (“Lead Paint Form”) for houses built before 1978
- Purchase and Sale Agreement
- Buyer and Seller Notice of Dual Agency if needed
- First Deposit Check
- Land Rider if needed
- Condominium Rider if needed
LEAD PAINT DISCLOSURE
Massachusetts and federal law requires all parties (sellers, real estate agents, buyers) to comply with federal and Massachusetts lead-based paint disclosure requirements for homes built before 1978. They must fill out and sign the Property Transfer Lead Paint Notification before signing a P&S agreement. Here is a link to the form >>
THE PURCHASE AND SALE AGREEMENT
A legal contract consists of a written offer and a signed acceptance of that offer. (Verbal offers aren’t worth the paper they’re not written on.) In Berkshire County real estate transactions, the Standard Berkshire County Multiple Listing Service Purchase and Sale Agreement—aka the P&S—is what we use.
This section highlights the key components we focus on when writing an offer. Once you’re under contract, you’ll refer to the Buyer P & S Timeline.
1&2. PARTIES & DESCRIPTION. Of course the document begins by naming the parties involved, and describing the location, using deed and/or assessor map references.
3&4. PURCHASE PRICE & CLOSING DATE. This is crux of it: what you want to pay and when you want the keys.
- Price you wish to pay
- Amount of your earnest money deposit (typically 1% of purchase price, or a round number like $1000 or $5000)
- Amount of second deposit, to be submitted after the inspection contingency (typically, this amount brings your total deposit up to 5 or 10 percent of the purchase price)
- Balance to be paid at closing.
The listing broker holds the deposits in an escrow account.
5. CONTINGENCIES. The contract contains four contingencies to protect buyers. If despite diligent efforts, you…
1. don’t get the loan you’ve applied for
2. aren’t able to obtain a satisfactory insurance binder or
3. your home inspection is unsatisfactory
…you may cancel the agreement.
4. If the seller submits a failed Title 5 report, you may cancel the agreement.
8. INSPECTION. The purpose of the inspection is both for you to familiarize yourself with how the property functions and to scrutinize it for any safety, mechanical or structural defects. Inspections typically take 2-4 hours, depending on the inspector and the property. After reviewing the report, you will determine whether…
- The inspection was satisfactory, and you wish to move forward.
- The inspection was unsatisfactory, and you wish to cancel the agreement.
- The inspection was unsatisfactory, but you still want to purchase the property if you can negotiate an agreement with the sellers to resolve the issues. You will either ask them to address any safety, mechanical, or structural issues, or you will ask for a monetary concession to address those issues yourself, which allows you to be in control of the repairs. Heads up: You will need to distinguish between “improvements” you wish to make, and safety, mechanical or structural defects. These defects should be dangerous or costly enough to warrant a request.
Occasionally an extension is warranted if professional estimates need to be obtained as part of this negotiation process.
Assuming an agreement is reached, all parties will sign a revised P&S. If there has been an extension, the second deposit is typically delayed until agreement is reached.
13. FIXTURES. This paragraph states that whatever is physically attached (i.e. nailed or screwed in) or used in connection with the house is included in the sale. (The listing agent should specify if sellers have excluded any fixtures. Double check what appliances are conveying.) Often we reiterate the full list of appliances here.
30. BUYER’S DEFAULT. This is one of the few protections for the seller in this contract. If you fail to fulfill your obligations under the contract, you sacrifice the amount specified in paragraph 30. Standard practice for Buyer’s Default in this area is 5 percent of the purchase price.
35. SPECIAL CONDITIONS/ADDENDA. This section is used to add conditions that weren’t specified in the rest of the P&S. It is standard practice to insert an attorney review here—usually three or five business days. This is handy for when you’re writing a contract over the weekend. You won’t risk waiting to submit the offer, confident that your attorney can review it on Monday or Tuesday.
36. TERMINATION OF OFFER. Generally, we give sellers 2 days to respond to your offer.
RIDERS. Sometimes, when submitting a contract to purchase a piece of land or a condo, we will attach a Rider, detailing additional terms.
Of course, as with any legal document, we recommend you have your attorney review it.
NEGOTIATING
We will submit the necessary documents along with your deposit check to the listing agent. If the seller signs, great news—you are under contract! Otherwise, whether they make a counter offer or they choose not to respond at all, we will discuss strategy, and formulate a counter offer. As you move through the negotiation, we will advise you, and advocate for you. If/when an agreement is reached, the P&S will be revised, and signed by all parties.
Multiple Offers: There are many potential scenarios in multiple offer situations. The seller may simply sign one right away, but more often they will make a decision only after asking all parties to submit their “best and final” offers for review.
Heads up Regarding Purchasing Personal Property: The P&S contract pertains to the sale of real estate, not personal property, such as furnishings, lawn mowers, etc. Particularly if you are getting financing, personal property must not be mentioned in the P&S contract. If you are purchasing furnishings or other personal property from a seller, we will draft a separate agreement.
Once you’ve submitted an offer, please use the next section, Buyer P & S Timeline, as your guide.