Sale

Blog Series: Offers to Purchase

Whether you are working with a realtor or not (If you are, be sure to review our last post discussing listing agreements), in order to make your dream home your own you will have to submit an Offer to Purchase (commonly referred to as “Offer”).

Quite simply, an Offer is the contract that will guide and govern you through your real estate purchase.  By law, an Offer to purchase real estate must (1) be in writing; (2) describe with specificity the real estate you wish to purchase; (3) be signed by all parties – including both spouses if both will own the property.  Wis. Stat. § 706.02.  This rule is called the Statute of Frauds.

Most Offers drafted by attorneys and realtors will be on the standard form WB-11 approved by the Wisconsin Department of Regulation and Licensing.  This form contains several sections and deadlines, including those setting the purchase price (including earnest money), contingencies, title, closing and occupancy.

Purchase Price

Undoubtedly one of the first and most important discussions between a seller and a prospective buyer is the purchase price.  As discussed in this previous post, significant thought should go into the determination of the purchase price.

To demonstrate that the he or she is serious about the potential purchase, a buyer will commonly submit earnest money  within a few days of acceptance of the Offer.  Upon a successful closing, these funds are applied as part of the purchase price.  If for some reason the sale doesn’t close, the earnest money may either be returned to the buyer or retained by the seller (depending on the language in the Offer).

Contingencies

Offers routinely include several contingencies depending on the specifics of the transaction and the property.  More common contingencies include those for financing the transaction, inspection and appraisal of the property, and title.  Attorneys may draft additional, specific contingencies depending on your particular circumstance. Contingencies must include a completion deadline – calculated either from the acceptance of the Offer or backwards from the proposed closing date – as well as what actions must occur in order for it to be satisfied.  In the event a contingency is not satisfied or the deadline is missed, the parties may waive the contingency, extend the deadline for compliance, or, in some cases, terminate the transaction.  Multiple individual contingencies will be discussed in detail in future posts.

Closing and Occupancy

The Offer will set a deadline and place for the transaction to close and when the buyers will take occupancy.  Occupancy is usually provided immediately upon closing.

The above constitutes a simple overview of residential Offers to Purchase.  If you are looking to submit an Offer, or have already submitted an Offer but have questions or concerns, we strongly recommend that you meet with an experienced real estate attorney.  If you would like to meet with own of our experienced real estate attorneys, please contact our office at (608) 837-7386.

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