As a local real estate attorney handling closings on the South Shore, South Coast, Metrowest and Greater Boston areas of Massachusetts, people often ask me questions such as:
How do I write up an offer to buy a house?
Who writes up the offer to be a home?
What are the most important aspects of the offer?
How much does it cost to draft an offer?
Is an offer a binding contract in Massachusetts?
Should a real estate agent write the offer for me?
The Massachusetts Association of Realtors (“MAR”) Contract to Purchase Real Estate (With Contingencies) form is one of the two commonly used forms used to initiate a residential real estate purchase in Eastern Massachusetts.
The other main form is known as the Greater Boston Real Estate Board (“GBREB”) Offer to Purchase Real Estate.
It is VERY IMPORTANT to note that an offer can be considered a binding legal contract. But you are afforded many contingencies as a buyer.
The following is a detailed look at the MAR form:
From: The Buyer’s name and address
To: These lines are used to fill in the seller’s name and address, if known. The name should be determined based on an examination of the public records by your real estate agent. If all else fails, the phrase “Owner of Record” is sufficient to complete this section.
Introduced by…: The name and brokerage of your real estate should be filled in here. This prevents any commission disputes among the agents. If you are working with a buyer’s agent, make sure their name is used here.
The BUYER offers….: This field calls for the property address. It would be wise to also include the MLS Number of the home as well as the square footage of both the home and the lot it is situated on.
1. Purchase Price: The price you are offering for the home, including the deposit amounts. Typically, a check for $1000 is made to bind the offer, and then an additional 3 to 5% of the offer less the initial deposit would be made upon signing of the Purchase and Sale Agreement. The balance would be paid “at the time of delivery of the Deed”, aka the Closing.
2. Duration Of Offer: Sets the timeframe for which your offer is valid for. It is prudent to give the seller adequate time to respond. The offer can always be revoked before they have provided an answer.
3. Purchase And Sale Agreement: Sets the date by which the Purchase and Sale Agreement (“P&S”) is to be signed. A rule of thumb would be 3 business days from the expiration of the Inspection Contingency Date. The P&S expands upon the Offer and is the formal legal contract setting forth the specifics of the transaction. The transition from Offer to P&S essentially eliminates many of the Buyer’s contingencies that the offer may have contained, as the Buyer was afforded the opportunity to conduct their due diligence after the Offer and before the P&S.
4. Closing : Establishes the time, date and place of your closing: The time is genereally just held as a placeholder. The closing is typically scheduled for a time convenient for all parties. The tradition has been to conduct the closing at the county Registry of Deeds, but with the advance of technology, closings are now more frequently held at a real estate brokerage or the closing attorney’s office.
5. Escrow: Indicates who shall hold the deposit monies. Typically, the listing real estate brokerage will or the Seller’s Attorney.
6. Contingencies: The Buyer is afforded certain protection.
a. Mortgage Contingency
Along with the Inspection Contingency, this is the most important contingencies in the transaction and will be carried forward onto the Purchase and Sale Agreement. This clause is HUGELY important. It is an “out” clause for the Buyer to have their deposit returned if they are unable to secure a commitment from their lender for the mortgage. In order to exercise this clause, the Buyer must first apply for the mortgage by the specified date in this clause. And if there is an issue with obtaining the mortgage commitment, the Buyer must notify the Seller by the contingency date. Typically, if the commitment is not yet available by the date, the date can be extended by mutual agreement. The clause, as written, does not require the Buyer to provide the seller a denial letter from the lender, but the practical application of the clause often includes sharing the denial letter with the seller.
b. Inspection Contingency
Another crucial clauses is the Inspection Contingency. This protection typically does not carry forward into the Purchase and Sale Agreement. The Inspection Contingency is another “out” clause for the Buyer to have their deposit returned if the Buyer discovers defects with the home during the home inspection. A threshold is set forth in the offer as to what cost to repair is the trigger to exercise the clause. Generally speaking, the dollar amount used in this clause is $1000, but we have seen this figure vary widely depending on the negotiations to that point. The lower the figure, the easier it would be for the Buyer to exercise their option to withdraw. The clause must also include a date by which the inspection must be conducted and then another date by which the Buyer must notify the seller of the intent to withdraw. It is advisable to conduct the home inspection as soon as possible, in order to allow time to negotiate any results into the P&S.
7. Representations/Acknowledgements: The Buyer is acknowledging receipt of certain disclosures such as Home Inspection and Lead Paint disclosures.
8. Buyer’s Default: If the Buyer backs out of the deal without exercising one of their contractual rights to do so, the Seller may retain the deposit but not be able to seek additional damages.
9. Additional terms….: This field is best used to detail what you do and do not expect to be included in the home sale should the offer be accepted. For example, the shed, the swing set, the washer/dryer, the chandelier. Also, reference can be made here to common contract additions such as a TRID Rider and a mortgage pre-approval letter from your lender. Most sellers require this. Contact us if you need a recommendation to obtain a pre-approval letter.
About the author: The above Real Estate information on a Massachusetts Offer to Purchase Real Estate was provided by Timothy Sherman, an active attorney in the real estate law field. Tim can be reached via email at [email protected] or by phone at 781-664-4936. Attorney Sherman has helped people close on their homes in many Massachusetts cities and towns for the last 10+ Years.
Thinking of buying, selling or refinancing your home? I have a passion for Real Estate and love to share my legal expertise!
I handle closings throughout the South Shore and Greater Boston Area such as: Boston, Braintree, Canton, Cohasset, Dartmouth, Dedham, Duxbury, Fairhaven, Hanover, Hingham, Marshfield, Milton, Nantucket, Newton, Norwell, Plymouth, Quincy, Walpole, Wellesley, Westwood, Weymouth and Wrentham.
