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by Lucy Harr
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Perhaps you're wondering how to work directly with an owner in purchasing a home. Here's how the process works.
- To make an offer, ask the owner for the "Residential Offer to Purchase" form. This is a legal form you use to offer a purchase price and also describe the contingencies of the sale. Contingencies include such items as obtaining financing, having the home inspected, selling another house and so forth. This is a standard legal form used in almost every home sale, but you need to read it carefully and fill it out completely. You'll also receive a "Real Estate Condition Report" which provides details on various defects. (This report must be provided to you in any real estate transaction.)
- Return the offer and an earnest money check. Earnest money represents your good faith in going through with the deal. The amount of the check varies, but is typically no less than $1,000, and often is about 1% or more of the purchase price. If you buy the house, you'll usually have the amount credited to the purchase. If the contingencies identified in your offer to purchase are not met, you will get your money back. But you will not get the money back simply because you've had a change of heart. Ask whom to make the check payable to; often it's a trust fund.
- If necessary, a counter-offer will be made. Sometimes, counter offers are countered as well. Both the offer and counter-offers spell out the various conditions of the sale, and must be adhered to. The contingencies have deadline dates. Neither party can ignore the deadlines. If there's a problem in meeting one, however, both parties can agree to an extension. The contingencies are removed by filling out a legal form describing the action that's been taken. For example, once you obtain financing, that contingency is satisfied.
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