Purchase proposal: what it is and how it works
You have seen a house that you like and within which you can imagine your present and future: great! We like to think that buying a house, which in itself is a bureaucratic act, starts from something very instinctive, a bit like a bolt of lightning.
And, like love stories, even to conclude the buying and selling of real estate, a … proposal must come!
In fact, when one is ready to buy a particular house, the first step is to make a proposal to purchase it.
In this article we will look in detail at what a purchase proposal is, how it should be drafted and how it works.
Real estate purchase proposal: what is it
Let’s start with the basics: the real estate purchase proposal is a document.
Already, because, in real estate, oral promises are not legally binding and, in the protection of both the seller and the buyer, should really be avoided.
More specifically, the real estate purchase proposal is the buyer’s intent to buy a house at a certain price or under certain conditions. To give legal validity to this intention, the prospective buyer must fill out a document.
This document-usually a standard pre-printed form to be filled out-will be provided to you by the real estate agency with whom you want to finalize the purchase.
The same agency, if it is competent and of quality, will help you in the complete drafting of the document, indicating the information to be included and the documents to be attached-which we will discuss in a moment.
But first, let’s resolve a question you are surely asking yourself: what is the right proposal to make to secure the purchase of your dream property?
How much can you lower the price of a house in the proposed purchase?
There is no magic formula: the key factor in these situations is the expertise of the real estate agent, who will be able to best advise you and suggest a purchase proposal that is both beneficial and appealing.
Usually, however, people try to aim for a 7-8% reduction from the initial asking price. In some situations, it can be as low as 10-15% right away. Discuss with your trusted real estate agent and avoid making excessive demands-the risk is to alienate the seller.
Having resolved this doubt, let’s get back on track and address the various aspects of the purchase proposal.
What is written in a real estate purchase proposal document?
As we said, the real estate agency will provide the prospective buyer with a form to fill out. The following information should be reported within this form:
- The biographical data of the person making the proposal;
- The seller’s master data;
- data on the property in question (address, APE, cadastral information, …)
- The proposed purchase price;
- The deposit paid to accompany the purchase proposal;
- the method of payment (with any liens, in case you were waiting for mortgage approval);
- The validity period of the purchase proposal;
- An indication of the hypothetical deed date on which to finalize the purchase;
- The real estate agency’s fee;
- any other useful information, such as
- Urban and cadastral uniformity of the property;
- Freedom of the property from constraints that might limit its commerciality;
- Cadastral identification of the property;
- detailed description of the property.
What documents are needed to make a real estate purchase proposal?
It goes without saying, based on the list we have just seen together, that during this stage they are needed, in the case of those wishing to purchase the property:
- Valid biographical documents;
- The check for the deposit paid.
For sellers, the list is longer and more substantial, as in addition to biographical information, numerous other essential real estate documents are needed to finalize the purchase and sale.
When is the real estate purchase proposal made?
The real estate purchase proposal is the very first stage of buying and selling and usually occurs following a positive tour of the property by the prospective buyer.
If you are looking for a house to buy, chances are you have already seen a few, and perhaps one in particular has caught your eye and you would love to buy it.
Now is the time to take action!
With the help of the real estate agency, you can work out a strategic and intelligent real estate purchase proposal.
How much to give as a deposit during the proposed purchase?
Another token question and one that surely came to your mind, since we mentioned the word “deposit” in the previous paragraphs.
Again, there is no exact mathematical formula, nor are there any hard-and-fast rules that determine the value of the deposit to be paid at the time of the proposed purchase.
In general, we can say that down payments for the purchase of a property average around 10-15% of the house price.
We will not go into detail on this issue here, because there are many, many things to be said about the deposit to be given at the time of proposal-which we will elaborate on elsewhere-but we will just give you one piece of advice: listen to the suggestions of your trusted real estate agent.
He will know how to resolve any doubts you may have about the deposit issue and help you understand how to write and handle the check.
What does “irrevocable purchase proposal” mean?
Do not be intimidated by this word, but rather take it as a spur to deal seriously with the idea of buying a home and opening a sale for a specific property.
An irrevocable purchase proposal is a commitment that, until it is also confirmed by the seller, turns out to be binding only on those who wish to buy the house.
In fact, the seller also has the freedom to evaluate other purchase proposals and choose the one that is most interesting and advantageous to him. In case, then, it should reject your proposal, the commitment is cancelled and, with the deposit back in your possession, you have the opportunity to formulate a new proposal for the same property or to search for others.
In the happy case where the purchase proposal is also confirmed by the seller, the commitment becomes binding for him as well, no longer just for you who are buying.
What happens after the purchase proposal?
Have you made a purchase proposal? Great!
Now all you have to do is wait for the response and find out whether the seller will want to accept or reject your proposal.
In case he rejects you, don’t beat yourself up: you still have a chance! You can in fact, with the help of the real estate agent, try to formulate a new purchase proposal if you really don’t want to miss the opportunity to buy that property.
Or, you can set that house aside and evaluate others by making a purchase proposal for another property.
If, on the other hand, the seller should immediately accept your purchase proposal–well, congratulations! You are about to officially take possession of a property. Remember, however, that still that house is not yours.
In fact, two very important steps are missing: the preliminary sales contract and the deed!