How to Write an Offer to Purchase

How to Write an Offer to Purchase

The quality of your purchase offer is an essential part in doing purchase dealings. This is just as important as the price being offered by you. Further, the purchase offer also depends on the kind of purchase being offered.

What is an offer?

It is basically an expression of interest to contract on a particular asset being offered by one party to another.

What is an offer to purchase?

This is a written intent to buy an asset (real estate property, equipment, supplies) by one party from another which is available for sale.

What is a purchase contract?

A purchase contract or a contract to purchase is a binding written contract between two or more parties to purchase an asset which is based on established laws. It is a legal contract.

There are a variety of things being offered for sale by any party, as mentioned above it can be a real estate property, personal property (e.g. car) and shares or bonds for a company’s equity and debt.

Parties involved in the purchase process would include:

- Buyer – a person or an entity that shows interests in the purchase of an asset being offered by another.

- Seller – a person or entity that trade goods or services in exchange of payment which is usually paid in cash.

- Broker – someone who poses as the middle man between a buyer and seller. They function as the liaison for both the buyer and seller. Although they can be disregarded, brokers can help ease the complex purchase process.

The process involved in the writing of the offer or the process itself is complex and requires sufficient knowledge. Thus, hiring a professional to help or assist you will lessen the complex in and outs of the process. Nowadays, more brokers are available; make sure you choose someone who is competent to do the job for you.

Offer and Acceptance process

This is a process wherein an interest party (buyer) makes an offer to another party (seller). The seller has the option whether or not to accept or reject the offer. In the event of rejection, seller may make a counter offer (a type of offer in response to another offer which was found to be undesirable). In return, buyer can either accept or reject (without counteroffer or with another counteroffer). In the event that one of the parties accepts, he then communicates this acceptance to the other and consequently a purchase contract is created.

Basic elements of a standard purchase offer

An offer to purchase encompasses detailed and complex information. If you have no idea of how to make one, you may want to hire someone to assist you on this one. Since this is a binding document, ask or hire someone that will thoroughly discuss the contents of such offer for you to understand what you are entering into and avoid further legal consequences.

Here are the elements comprising a purchase offer…

1. A clear identity of the buyer and seller
2. Sales price/purchase price
3. Closing date
4. Legal description of the asset which is the subject matter of the offer
5. In case of down payment or earnest money
6. Financing terms
7. In case of required fees associated with the offer
8. Contingencies
9. Other terms agreed upon by the buyer and seller

The offer is conveyed to the seller with the option to accept or not. Acceptance is evidenced by the seller’s signature affixed on the purchase offer document.

What is earnest money?

Earnest money or earnest payment is a deposit in security of the purchase of a real estate property which is made by a buyer to a seller. Generally, it is not required in an offer to purchase, however payment of earnest is usually done to demonstrate buyer’s good faith on the contract and it is likely that the seller will accept the offer if there is an earnest payment.

How much should you offer?

Factors that may affect or influence in the determination of your offer price:

- Your budget
- How badly you want it
- Number of other interested buyers
- Asset which is the subject matter of the offer compares with other similar assets